Chip design software firms climb as US lifts curbs on China exports

[NEW YORK] Shares of Synopsys and Cadence Design Systems jumped in premarket trading on Thursday (Jul 3) after the US lifted export restrictions on chip design software to China, signalling a thaw in trade tensions between the world’s top two economies.

The two companies, along with Germany’s Siemens, said they were resuming access to their electronic design automation (EDA) tools for Chinese customers.

Synopsys and Cadence rose 6.7 per cent and 5.9 per cent, respectively, in US trading before the bell, and Siemens gained 0.9 per cent in Frankfurt.

The three firms together control more than 70 per cent of China’s EDA market, according to an April report from state-run Xinhua News Agency.

EDA software is critical for designing semiconductors used in smartphones, cars and computing devices.

The US Commerce Department also moved to withdraw a licensing requirement on ethane exports to China imposed earlier this year.

Both measures were part of a series of tit-for-tat trade restrictions initiated by the Trump administration following China’s suspension of rare earth exports in April.

The White House last week said it had reached an agreement with China around expediting shipments of rare earth minerals to the US

“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.

However, “there is no indication that controls imposed for national security reasons will be eased off for the likes of Nvidia and ASML,” Streeter added.

The Trump administration in May had placed export limits on Nvidia’s H20 artificial intelligence chip in an effort to stymie Beijing’s access to cutting-edge technology. REUTERS