Shares of major chip design software companies Synopsys and Cadence Design Systems rose sharply on Thursday following the U.S. government’s decision to lift export restrictions on chip design software exports to China, alleviating market uncertainties and preserving access to a critical revenue source.
Market Impact
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The restrictions, introduced in late May, had cut off over 10% of revenue for these companies, negatively impacting forecasts and share prices.
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Analysts from Mizuho noted the export resumption will limit revenue loss to just one month in the current quarter.
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The easing of trade tensions could facilitate China’s approval of Synopsys’s $35 billion acquisition of engineering software firm Ansys, a deal pending regulatory clearance primarily in China.
Stock Movements
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Synopsys shares rose 5.5%, despite ongoing assessments of export curbs’ financial impacts.
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Cadence Design Systems surged 6.1%, reaching a record high of $330.09.
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Ansys gained around 3.5%, while Germany’s Siemens, another key player in electronic design automation (EDA), rose 1.5%.
Expert Insights and Context
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Susannah Streeter of Hargreaves Lansdown described the move as “a distinct warming of relations and a small ceasefire in the chips war.”
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However, she cautioned that it does not represent a broad easing of restrictions on high-end chip exports, especially from companies like Nvidia.
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U.S. concerns persist over China’s technological advancements and potential military applications of American chip technology.
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The curbs have driven increased domestic chip design efforts in China, supported by state subsidies, raising fears of retaliatory actions that could affect regulatory decisions like the Synopsys-Ansys deal.
Deal Deadline
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The Synopsys-Ansys merger has been cleared in all jurisdictions except China, with a closure deadline of July 15 and an option to extend to January next year.