U.S. Rescinds Chip Design Software Export Controls to China in Major Step Toward Easing Tech Tensions

In a shift that signals a thaw in escalating tech tensions between Washington and Beijing, the U.S. government has rescinded its export restrictions on advanced chip design software to China. The decision, confirmed by three of the largest players in the electronic design automation (EDA) industry—Siemens EDA, Synopsys, and Cadence—marks a potentially significant de-escalation in the ongoing U.S.-China technology trade conflict.

The companies said Thursday that they each received formal notification letters from the U.S. Department of Commerce stating that the previous licensing requirements imposed on exports to China had been reversed. The letters were issued just weeks after the Department informed these firms, on May 23, that they must obtain licenses before selling chip design software and related technologies to Chinese clients.

With the restrictions now lifted, Germany’s Siemens AG, whose U.S.-based semiconductor software unit Siemens EDA is headquartered in Oregon, confirmed it had already restored full access to its restricted technologies. Sales and customer support services to Chinese firms have resumed, the company said. U.S.-based Synopsys and Cadence also confirmed receipt of the reversal order and indicated they are in the process of restoring services to their Chinese clients.

Background and Market Impact

The electronic design automation (EDA) software provided by these firms is critical to the design and manufacturing of semiconductors, including those powering artificial intelligence, 5G networks, and advanced computing systems. The global EDA market is overwhelmingly dominated by the U.S., with Synopsys holding 31% market share, Cadence 30%, and Siemens EDA 13%, according to 2024 figures from TrendForce.

The recent rollback of restrictions comes amid signs of a broader trade détente between the U.S. and China. Last week, Beijing signaled it had reached conditional agreements with Washington to resume some technology exchanges, including limited exports of rare earth materials and joint research frameworks. The lifting of chip software controls appears to be a reciprocal gesture from the U.S., reflecting cautious optimism in repairing fractured trade ties.

Shares of both Synopsys and Cadence surged by about 5% following the announcement, reflecting investor relief over the regained access to China—one of the world’s largest semiconductor markets. Synopsys CEO Sassine Ghazi had earlier flagged a noticeable revenue slowdown from Chinese customers during the company’s second fiscal quarter ending April 30, with China accounting for roughly 10% of its $1.6 billion revenue during the period.

Industry analysts see the move as not just a business reprieve, but a strategic recalibration. For over a year, EDA companies had been caught in the crosshairs of U.S. efforts to choke off China’s access to advanced semiconductor capabilities. The licensing requirement introduced in May came on the heels of broader bans targeting hardware—such as Nvidia and AMD’s AI chips—on national security grounds.

With the rollback now in effect, the Trump administration appears to be balancing its national security concerns with the economic interests of U.S. tech firms, many of which depend heavily on overseas markets. The reversal also acknowledges China’s progress in localizing its chip ecosystem and designing homegrown alternatives. Synopsys had noted in prior earnings calls that Beijing had accelerated policies to build its own EDA industry, heightening the urgency for U.S. firms to stay competitive through continued market access.

The EDA policy shift also underscores a broader recalibration in U.S.-China relations, particularly in the technology sphere. As both powers edge toward a new phase of strategic competition, there is growing recognition that mutual interdependence—especially in foundational technologies like semiconductors—cannot be severed overnight without global economic fallout.

Restoring software export rights is seen as one of several confidence-building steps. It comes amid tentative discussions around a new U.S.-China trade framework that could involve limited cooperation in AI safety standards, rare earth mining, and green technology development.

While neither side has confirmed the details of any formal tech truce, the Commerce Department’s quiet reversal—without a formal public announcement—underlines that Washington is moving cautiously, perhaps testing the waters for more pragmatic engagement.