Chip design software firms climb as US lifts curbs on China exports
De-escalating US-China trade tensions bring major relief for top EDA players Synopsys, Cadence and Siemens
[NEW YORK] Shares of Synopsys and Cadence Design Systems jumped on Thursday (Jul 3) after the US lifted export curbs on chip design software to China, easing uncertainty around access to the crucial market.
The restrictions, announced in late May, had essentially cut off the market that brings over 10 per cent of revenue for the industry’s major players, hitting forecasts and knocking down shares.
The export resumption means both the companies will only lose one month of revenue in the current quarter, Mizuho analysts said. The easing trade tensions may also clear the path for long-awaited Chinese approval of Synopsys’s US$35 billion buyout of engineering software firm Ansys, the analysts added.
Synopsys, which had pulled its forecast in May due to the curbs, rose 5.5 per cent. The company said on Wednesday it is still assessing the impact of export restrictions on China on its financials.
Cadence gained 6.1 per cent and hit a record high of US$330.09, while Ansys rose about 3.5 per cent. Germany’s Siemens, the third major player in the electronic design automation tools sector, was up 1.5 per cent in Frankfurt.
“This marks a distinct warming of relations and a small ceasefire in the chips war,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
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Still, she cautioned that the move did not signal a broader shift on high-end chip exports from companies such as Nvidia. “The US will remain concerned about the technological prowess China has developed, and its use of US intellectual property.”
Successive US administrations have sought to restrict China’s access to advanced American chip technology, citing concerns that it could be used to strengthen Beijing’s military.
But the export curbs have also fuelled a surge in domestic chip design activity in China, aided by generous state subsidies. They have also stoked fears of retaliation, with analysts warning that Beijing could delay or block approval of the Synopsys-Ansys deal in response.
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The deal, which has received merger clearance in every jurisdiction other than China according to the companies, carries a deadline of Jul 15 for its closure with an option to extend until January next year. REUTERS
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