U.S. Lifts Chip Design Software Export Restrictions: Synopsys, Cadence To Benefit (SNPS, CDNS)

In a move hailed as a potential catalyst for growth, the U.S. government has rescinded its recent export restrictions on chip-design software to China, sending ripples of optimism through the semiconductor industry.

The reversal, announced by leading software designers Siemens AG, Synopsys, and Cadence Design Systems, promises to unlock significant revenue streams and ease trade tensions between the world's two largest economies.

Synopsys' stock (NASDAQ:SNPS), in particular, stands to gain substantially from this policy shift, as analysts predict a resurgence in its China-based revenue, a critical component of its overall financial health. The SNPS stock price is trading up 4,76% in the pre-market, with easing tensions looking to lift the stock out of the bearish channel that has held over much of the past year.

The initial export controls, implemented in May 2025 by the U.S. Department of Commerce's Bureau of Industry and Security (BIS), mandated that companies secure licenses before exporting Electronic Design Automation (EDA) software to China. This measure, intended to prevent the military application of advanced semiconductor technologies by Chinese entities, created immediate headwinds for EDA software providers.

Synopsys, feeling the impact, even suspended its financial guidance for the fiscal year, underscoring the severity of the restrictions.

However, the landscape shifted dramatically this morning as the U.S. government reversed course as part of a broader trade agreement with China. The decision allows Siemens, Synopsys, and Cadence to resume software sales and support services to their Chinese clientele.

Siemens was quick to announce the restoration of full access to its software and technology for Chinese clients, while Synopsys and Cadence confirmed their efforts to reinstate access to their respective products in the region.

The immediate market reaction was telling. Synopsys' shares surged. These gains reflect market confidence in the companies' capacity to reclaim market share and revenue streams in China, a region previously accounting for over 10% of Synopsys' total sales.

Cadence stock price (CDNS) is also trading firmly higher, up 4.2% in early trading.

The policy shift is part of a broader effort to de-escalate trade tensions between the U.S. and China. The recent trade agreement includes provisions for both nations to ease certain technology export restrictions, aiming to foster improved economic relations. However, the situation remains fluid, subject to ongoing negotiations and the potential for future policy adjustments.

While the immediate outlook appears bright for Synopsys, potential challenges remain. The company must navigate the evolving geopolitical landscape, ensuring compliance with any future regulatory changes. Furthermore, increased competition in the Chinese market could impact profit margins. The Trump administration has recently indicated a pullback on Nvidia's H20 chip crackdown after a Mar-a-Lago dinner, and has also backed off AI chip exports to foreign markets, these policy U-Turns leave much to be desired in terms of long term stability.

Despite these potential hurdles, the lifting of export restrictions presents a significant opportunity for Synopsys to bolster its financial performance and solidify its position as a leading provider of EDA software.