An agreement between powers allows firms like Synopsys, Cadence, and Siemens to resume operations with Chinese companies in the semiconductor sector.
In an unexpected turn in the tech war between the United States and China, the U.S. administration has lifted restrictions on the export of electronic design automation (EDA) software to Chinese clients. This gesture is not without strings attached; it is part of a trade agreement aimed at easing increasing tensions between both powers. In exchange, China will relax its controls on rare earth exports, key minerals for the global tech industry.
The U.S. Department of Commerce officially notified companies like Synopsys, Cadence Design Systems, and Siemens EDA that they will no longer need government licenses to offer their products in China. This measure represents a significant relief for the tech sector, enabling Chinese chip manufacturers to resume their design activities with top-tier tools.
A strategic necessity masked as a concession
The lifting of these restrictions is driven not by an ideological shift or improved relations, but by an urgent necessity. Since May, China had intensified control over rare earth exports, materials without which manufacturing chips, wind turbines, batteries, or airplanes is virtually impossible. Given that China controls nearly 90% of the global supply of rare earths, the U.S. was forced to renegotiate.
According to industry sources, the Chinese side will accelerate export permits for these critical minerals, allowing U.S. industries dependent on them to maintain their production pace. In return, Washington will permit not only the supply of EDA software but also aviation engines and ethane, essential for plastic production.
A symbolic victory for Beijing
From China’s perspective, this represents a strategic and symbolic victory. Regaining access to tools from Cadence, Synopsys, or Siemens will reactivate stalled chip projects, improve the energy efficiency of existing designs, and accelerate the development of domestic semiconductors.
Firms like Huawei, SMIC, or Loongson, which had faced significant hurdles in accessing state-of-the-art chip design technology, will now be able to compete more effectively. Despite efforts to build their own EDA ecosystem with companies like Empyrean or X-Epic, they are still far from the sophistication of their Western counterparts.
Immediate impact on markets
The announcement had an immediate positive effect on stock markets. Shares of Synopsys and Cadence saw gains of up to 6% on Wall Street, while Siemens AG jumped 3% on the German stock exchange. Notably, the Chinese market accounts for 16% of Synopsys’s revenue and 12% for Cadence.
Besides chip design software, the agreement includes the lifting of restrictions on the transport of ethane in tankers to Chinese ports and the resumption of supply for commercial aviation engines.
National security now a bargaining chip
One of the most striking elements of the agreement is that for the first time, the U.S. has put the use of export controls on the negotiating table, when historically these have been considered non-negotiable national security instruments. This precedent could change the approach to future negotiations with other countries.
Conclusion:
The agreement between the United States and China highlights an unavoidable reality: the technological interdependence between both powers. Despite hardened stances in recent years, the global economy continues to force points of understanding. The reopening of the EDA software market to China provides a breather for the semiconductor sector, but it also underscores that the tech war is far from over.
Meanwhile, Beijing has managed to strengthen its technological autonomy without relinquishing control over strategic resources. And Washington, aware that chips cannot be made without rare earths, has opted for a pragmatic approach. In the end, silicon and minerals win another diplomatic battle.
Source: Bloomberg