US Restricts Tech Exports to China
So, guess what? The U.S. government just told a bunch of companies they can't send stuff to China anymore, well, not without getting special permission first. And some companies who already had permission? Yeah, those got taken away too. This is all coming from people kinda in the know about this whole situation.
It seems like the U.S. is trying to make it harder for China to get certain things they need for important industries. Like, things used to make computer chips, and also chemicals like butane and ethane. They're even putting the brakes on machine tools and stuff for airplanes, you know, like aviation equipment.
Loads of companies got letters about this from the U.S. Department of Commerce in the last few days. Especially the companies that make software used to design those computer chips. They got letters saying they'd need a license now to ship to customers in China. Some big names in that software world are affected, like Cadence, Synopsys, and Siemens EDA, which is part of Siemens.
The word is the Commerce Department will look at each request for a license one by one. So, it's not like a total ban on everything, which is something to think about.
Now, idk if this is part of a bigger plan to get some leverage for trade talks, especially since there aren't new taxes on goods happening right now. The Commerce Department did say they're looking at what's being exported to China that's, you know, strategically important. And yeah, they mentioned they've stopped some existing export permits and added new requirements while they figure things out. The White House didn't say anything right away when asked about it.
Shares for Cadence and Synopsys took a hit after this news came out. Cadence didn't wanna say anything about it, and Siemens is trying to figure out what this means for them. China's government wasn't too happy about it, saying the U.S. is messing up global supply chains and using technology and trade as weapons against them. They also said nothing will stop China from developing on its own.
Interestingly, the CEO of Synopsys said they hadn't actually gotten a letter from the Commerce Department yet, and they were just hearing about it like everyone else. Later though, Synopsys basically said their money plans for next year are still good, and their shares, along with Cadence's, actually went back up a bit after the market closed.
Cutting off Chinese companies from this design software would be a pretty big deal for that industry. Chinese chip design companies really rely on the fancy U.S. software. Apparently, Synopsys, Cadence, and Siemens's Mentor Graphics together control a huge chunk of the market in China.
Companies in China that use this software include Brite Semiconductor, Zhuhai Jieli, and VeriSilicon, which helps with computer chip designs. We tried reaching out to VeriSilicon and Brite, but they didn't get back to us. Calls to Zhuhai Jielei also didn't go through.
But, get this, some folks who work in the software industry that helps design chips said that business in China is still going on as usual for now. They're waiting to hear more about how these new rules will actually work.
One investment guy, Nori Chiou, thinks this won't really work and will just help China figure out how to do things on their own, kinda like what happened with computer chips. He also mentioned there are a lot of copied versions of these design tools out there that aren't hard to get. So, if the official ways are blocked, other Chinese software companies might actually do better.
There are already some Chinese options for this kind of software, like Empyrean Technology and Primarius Technologies. Their shares went way up after this news. Huawei, which hasn't been allowed to use U.S. suppliers since 2019, even said back in 2023 that they'd developed their own design software.
Someone who used to work at the Commerce Department said these software makers are the real key point, like, the spot where you can really stop things. They also said that thinking about limiting this software to China has been a thing since the first time Trump was president, but they didn't do it because it seemed too aggressive.
China brings in a good amount of money for both Synopsys and Cadence. Synopsys works with big chip companies like Nvidia, Qualcomm, and Intel and makes software and hardware used to design advanced computer processors. Earlier reports said the Trump administration had told these software companies to stop selling to Chinese companies.
