As part of a larger trade agreement where China agreed to relax export controls on rare earth minerals essential for U.S. manufacturing, the United States has lifted export restrictions on chip design software to China, enabling major Electronic Design Automation (EDA) vendors Synopsys, Cadence, and Siemens to resume sales to Chinese customers without special licenses.
Limitations On Exporting EDA Software
Export restrictions that forced American companies to get permits before exporting sophisticated EDA tools to China for less than six weeks momentarily disrupted global supply networks and chip design processes. After a trade agreement thawed relations, the limitations, which had been in place since late May 2025, were abruptly lifted on July 2. Siemens, Synopsys, and Cadence received formal notifications from the Bureau of Industry and Security. Immediate impact: U.S. EDA companies resumed sales and technical support of formerly banned software and technologies classified under ECCNs 3D991 and 3E991, giving Chinese clients full access again.
Compromise Of Rare Earth Materials
U.S. manufacturers faced severe supply chain disruptions when China decided in April 2025 to put permitting requirements on seven rare earth elements, endangering the production of high-tech items such as wind turbines, vehicles, and robotics. Shipments were essentially halted by the 45-day new permitting process, which also became a major negotiating chip between the two economic powers.
After two months of stringent limitations, Beijing agreed to begin exporting rare earth materials and magnets to the United States under the new deal concluded in late June 2025. On Fox Business Network, U.S. Treasury Secretary Scott Bessent acknowledged the agreement, saying that rare earth magnets “formed the core of a lot of our industrial base” and that “part of the agreement was tariffs coming down and rare earth magnets starting to flow back to the U.S.” The U.S. would remove its string of restrictions on China, and China’s Commerce Ministry said it would “review and approve eligible export applications for controlled items” in compliance with the legislation.
Business Reactions
When the policy was reversed, the three main EDA providers reacted quickly. Synopsys verified that the Bureau of Industry and Security notified it on July 2 that export restrictions had been lifted, with immediate effect. Cadence also declared that the May export restrictions had been lifted by the Commerce Department. In addition to acknowledging receipt of the notification, Siemens Digital Industries Software stated that it has already “restored full access to software and technology classified under Export Control Classification Numbers (ECCNs) 3D991 and 3E991” and was back in business with Chinese clients.
Following the news, investor confidence in these companies increased, as seen by the 6% increase in Synopsys shares and the 7% increase in Cadence stocks during overnight trading. While attempting to resume regular commercial dealings with their Chinese customers, all three businesses underlined their dedication to abiding with relevant export control laws and regulations. For these EDA software developers, the quick service restoration highlights the Chinese market’s economic importance.
Impact On The Market and Industry
Following the regulation change, stock prices for the major EDA software companies surged, with Synopsys and Cadence rising 6% and 7%, respectively, in overnight trade. This was due to investor excitement over regaining access to the profitable Chinese market. In addition to stabilizing these companies’ business prospects, the sudden return of sales and support gave the semiconductor industry as a whole new hope after weeks of uncertainty and supply chain issues.
With rare earth bottlenecks easing and advanced design tools once again available for innovation, the deal offers a quick return to normalcy for chipmakers and electronics manufacturers, lowering the danger of production slowdowns for anything from smartphones to electric vehicles.