In a significant move, highlighting the growing U.S.-China conflict, Synopsys Inc., the leading semiconductor design software company in the United States, has banned all sales and support services to China. The Synopsys China sales ban follows the US Department of Commerce’s new export restrictions, which target technologies crucial to semiconductor development and artificial intelligence. Synopsys’ decision, revealed in an internal memo, reflects rising pressure on American companies to comply with national security instructions aimed at limiting China’s technical gains.
U.S.-China Tech War Intensifies
Synopsys Inc. has ordered its China teams to halt all sales, services, and new orders in response to newly enforced U.S. export restrictions. The directive follows a notice from the U.S. Commerce Department’s Bureau of Industry and Security, which bans the export of key semiconductor tools to Chinese firms.
Affected technologies include electronic design automation (EDA) software, which is used to generate and test chip layouts, as well as particular chemicals used in semiconductor fabrication. In an internal memo obtained by Reuters, Synopsys confirmed the measures take effect on May 29, 2025.
Following a formal notice from the Bureau of Industry and Security (BIS) on Thursday, Synopsys swiftly retracted its financial outlook for both the current quarter and the entire fiscal year. The company claimed severe uncertainty caused by the recently enforced export limitations, noting that it is actively examining how these regulatory developments may affect its operations, financial performance, and overall business trajectory.
CEO Sassine Ghazi had earlier downplayed reports of government directives, noting during an earnings call that no formal notice had been received. However, Synopsys has since confirmed it is actively assessing the impact of the BIS order. In response, the company has suspended services for all clients in mainland China, including foreign subsidiaries and military-linked users, and restricted access to its SolvNetPlus support portal for Chinese users.
This move follows broader U.S. actions, such as revoking export licenses and tightening shipment rules for American firms like Synopsys. The new restrictions aim to block Chinese military-linked entities from accessing or using advanced semiconductor technologies for defense purposes.
Financial Implications and Market Uncertainty
Synopsys is encountering increasing challenges in China due to tighter regulations and economic headwinds, which have hindered sales in recent quarters. With China accounting for approximately 10% of its $1.6 billion fiscal Q2 revenue, the business is now under additional pressure from Beijing’s quest for indigenous chip design capabilities and rising local competition.
In response to new U.S. export restrictions, Synopsys has withdrawn its financial guidance for the current quarter and full fiscal year, citing significant uncertainty. The company had projected revenue between $1.76 billion and $1.79 billion, largely driven by AI chip demand. Shares fell about 2.5%, reflecting investor concerns over reduced China revenue, market access, and escalating regulatory risks.
Strategic and Broader Implications
The restriction affects Synopsys’ entire client base in mainland China, including both domestic enterprises and international corporations with on-the-ground activities. In addition, the company has revoked access to its SolvNetPlus customer assistance portal for Chinese subscribers, taking quick action to comply with newly mandated US export laws.
Synopsys, along with Cadence Design Systems and Siemens EDA, dominates over 70% of China’s electronic design automation (EDA) market, crucial for local chipmakers like Brite Semiconductor, Zhuhai Jieli, and VeriSilicon. The latest U.S. export restrictions on these tools threaten to derail China’s semiconductor ambitions, which heavily rely on U.S. technology for developing advanced chips. Cadence confirmed the curbs stem from U.S. national security concerns over potential military use.
Conclusion
As the Synopsys China sales ban ripples through the global chip supply chain, the implications for innovation and regulation are profound. However, China is rapidly advancing efforts to build domestic EDA capabilities and strengthen its semiconductor sector. But bridging the technological gap with U.S. leaders like Synopsys, who benefit from decades of innovation and proprietary IP, will take time. This shift could redefine the global chip supply chain, influencing costs, innovation trajectories, and international tech partnerships. At the same time, U.S. firms face mounting regulatory scrutiny, geopolitical risks, and the need to adapt to a fast-changing market landscape.
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