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Chip Design Software Stocks Surge After US Lifts Export Curbs on China

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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

  • The restrictions, introduced in late May, had cut off over 10% of revenue for these companies, negatively impacting forecasts and share prices.

  • Analysts from Mizuho noted the export resumption will limit revenue loss to just one month in the current quarter.

  • 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

  • Synopsys shares rose 5.5%, despite ongoing assessments of export curbs’ financial impacts.

  • Cadence Design Systems surged 6.1%, reaching a record high of $330.09.

  • Ansys gained around 3.5%, while Germany’s Siemens, another key player in electronic design automation (EDA), rose 1.5%.

Expert Insights and Context

  • Susannah Streeter of Hargreaves Lansdown described the move as “a distinct warming of relations and a small ceasefire in the chips war.”

  • However, she cautioned that it does not represent a broad easing of restrictions on high-end chip exports, especially from companies like Nvidia.

  • U.S. concerns persist over China’s technological advancements and potential military applications of American chip technology.

  • 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

  • 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.

U.S. Eases Chip Software and Ethane Export Curbs Amid China Trade Truce

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The United States has lifted export restrictions on chip design software and ethane to China, signaling further de-escalation of trade tensions between the world’s two largest economies. The move follows Beijing’s agreement to ease controls on rare earth exports—a key concession that helped maintain a fragile trade truce.

Restrictions Reversed

Leading electronic design automation (EDA) software firms—Synopsys, Cadence Design Systems, and Siemens—confirmed they are resuming sales and support for Chinese customers after receiving notification from the U.S. Department of Commerce that prior restrictions have been revoked.

  • Siemens announced Thursday it has restarted business operations in China, causing its shares to rise 1.7% after market opening.

  • Synopsys said it plans to restore customer access within three business days.

The EDA tools, essential for advanced semiconductor design, are dominated by these three firms, which together control over 70% of China’s market, according to Xinhua.

Ethane Export Curbs Also Rescinded

On the same day, the U.S. government also notified ethane producers that licensing requirements imposed in May and June had been withdrawn, allowing resumption of exports to China.

These curbs had been part of a broader U.S. response to China’s April suspension of rare earth exports, which had disrupted global supply chains for automakers, aerospace firms, chipmakers, and military contractors.

The Bigger Picture: Rare Earths for Rollbacks

According to a source familiar with the internal U.S. strategy, the Biden administration took a calculated step:

“The U.S. have escalated to de-escalate. They put restrictions on many more items in order to get the Chinese to back off on rare earths.”

Following negotiations, both sides reportedly confirmed a framework agreement in which:

  • China will review export applications for sensitive goods,

  • And the U.S. will roll back countermeasures imposed earlier this year.

China’s Commerce Ministry affirmed the arrangement last Friday, paving the way for what analysts describe as a return to February-March status quo.

Remaining Uncertainties

Despite the rollback on EDA tools and ethane, it remains unclear whether the U.S. has also lifted other strategic restrictions, including:

  • GE Aerospace’s license suspension for jet engine exports to COMAC’s C919 aircraft,

  • Or limitations on nuclear equipment suppliers selling to Chinese power plants.

The U.S. Department of Commerce has not yet commented on the latest developments.

Outlook

With both countries aiming to stabilize economic relations amid broader geopolitical tensions, more trade rollbacks could follow—particularly if the framework agreement holds. However, sector-specific restrictions tied to national security concerns are likely to remain or evolve in other forms.

Intel CEO Considers Major Shift in Foundry Strategy, Focuses on 14A Chipmaking to Compete with TSMC

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Intel’s new CEO Lip-Bu Tan is contemplating a significant change to the company’s contract chip manufacturing business, potentially abandoning the costly 18A process developed under his predecessor to focus on the newer 14A technology. This move aims to better compete with Taiwan Semiconductor Manufacturing Co (TSMC) and attract major clients like Apple and Nvidia, sources familiar with the matter told Reuters.

The 18A process, which Intel invested billions in, is seen as losing appeal among prospective customers. Shifting focus away from it could lead to a substantial financial write-off for Intel, possibly costing hundreds of millions or even billions of dollars. Intel confirmed it would continue producing chips using 18A for its own internal designs, including the “Panther Lake” laptop chips planned for 2025, as well as fulfilling existing contracts with Amazon and Microsoft.

Tan, who took over in March, has quickly moved to cut costs and reshape Intel’s direction amid years of falling behind in chip technology. The 18A process, which features new transistor designs and energy delivery methods, was intended to rival TSMC’s leading-edge technology but is now considered roughly comparable to TSMC’s earlier N3 node.

By emphasizing 14A, Intel hopes to offer a more competitive foundry service and win contracts from major chip designers currently reliant on TSMC’s manufacturing. The company is customizing 14A to client needs and planning a strategic discussion with its board as soon as this month, with a final decision expected in the fall.

Intel’s move reflects the high stakes involved in regaining its manufacturing edge after a difficult period culminating in an $18.8 billion net loss in 2024. Tan has also revamped Intel’s leadership and streamlined management to improve agility.

While the strategy is still forming, the potential pivot marks one of Tan’s boldest efforts to restore Intel’s chipmaking leadership and profitability.