Trump blocks US firms from selling semiconductor software to China
What's the story
The US government has directed tech companies to halt the supply of software designs used in semiconductor manufacturing to China.
The move is part of the Trump administration's strategy to curb Beijing's advanced chip production capabilities.
The Department of Commerce recently sent letters to leading electronic design automation (EDA) providers, including Synopsys and Siemens EDA, asking them to stop supplying this technology to China.
Review process
Commerce Department's review and potential impact on US firms
A source told Bloomberg that the Commerce Department is reviewing exports of strategic importance to China.
In some cases, it has suspended existing export licenses or added new license requirements while the review is ongoing.
The exact scope of these restrictions remains unclear, but one source suggested they could effectively ban business operations in China.
Synopsys derives about 16% of its revenue from China, while Cadence gets around 12% from the country.
Corporate responses
Synopsys and Cadence respond to export restrictions
In light of the potential restrictions, Synopsys CEO Sassine Ghazi said his company has not received any notice from Bureau of Industry and Security (BIS).
He added that their guidance for the full year reflects their current understanding of these export restrictions and expectations for a year-over-year decline in China revenue.
Meanwhile, Cadence's shares fell 10.7% while Synopsys's shares dropped by 9.6% after the news broke out.
AI chip warning
Trump's administration warns against Huawei AI chips
Earlier this month, the Trump administration warned that any company using artificial intelligence (AI) chips made by Huawei anywhere in the world could face criminal penalties for possibly violating US export controls.
This is part of Washington's increasingly aggressive strategy to thwart Beijing's efforts to build a self-sufficient semiconductor industry.
The strategy started with restricting China's access to advanced electronic component manufacturing equipment and has since expanded its reach.
Blacklisting strategy
US plans to blacklist Chinese chipmakers
According to a report by the Financial Times, the Trump administration intends to blacklist several Chinese chipmakers.
This would make it harder for US companies to provide them with American technologies.
The move is another step in Washington's efforts to curb China's technological advancement and protect its own national security interests.