San Jose-based Cadence Design admits to illegally supplying China, pays fine

By Ian King, Bloomberg

Cadence Design Systems Inc. pleaded guilty to charges accusing the company of violating US export controls by selling hardware and software to China’s National University of Defense Technology.

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The San Jose, California-based company, a maker of chip design tools, said it took a one-time charge of $140.6 million related to settling cases brought by the Department of Justice and the Department of Commerce’s Bureau of Industry and Security.

The Chinese institution is under military control and was placed on the Commerce Department’s entity list in 2015 for using US components to produce computers that support nuclear explosive simulation and military simulation activities, the Department of Justice said in a separate statement. The violations occurred from 2015 to 2021, the agency said.

Doing business in China, the largest market for semiconductors and related technology, has become increasingly difficult for Cadence and its peers under increasing restrictions put in place by Washington aimed at protecting national security. But the companies did win a recent reprieve. Earlier this month, the Trump administration lifted a stipulation that required export licenses for chip design software to Chinese customers.

Separately, Cadence raised its revenue forecast for the 12 months ending in December to $5.21 billion to $5.27 billion. That compares with an average of analysts’ predictions of $5.2 billion.

The shares rose more than 7% in extended trading following the earnings release. They had earlier closed at $333.76 in regular New York trading, leaving them up 11% this year.

Cadence and rival Synopsys Inc. dominate the market for software and computers used to design semiconductors and other electronics.

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