Shares of Synopsys (SNPS.O) and Cadence Design Systems (CDNS.O) rallied in premarket trading on Thursday following the U.S. government’s decision to ease export restrictions on chip design software to China a move signaling a potential thaw in trade tensions between Washington and Beijing. Alongside Germany’s Siemens (SIEGn.DE), both firms confirmed they are resuming access to their electronic design automation (EDA) tools for Chinese clients, restoring a critical supply link in the global semiconductor industry.
READ ALSO: US-China chip war: ASML says China employee stole data
Synopsys and Cadence saw premarket gains of 6.7% and 5.9%, respectively, in U.S. trading, while Siemens rose 0.9% in Frankfurt. Together, the three companies command over 70% of China’s electronic design automation (EDA) market, according to an April report by China’s state-run Xinhua News Agency. EDA software plays a vital role in the development of semiconductors used in smartphones, automobiles, and computing systems. In a related move, the U.S. Commerce Department also announced the removal of a licensing requirement for ethane exports to China, which had been imposed earlier this year.
Both actions were among a wave of retaliatory trade measures launched during the Trump administration, following China’s halt of rare earth exports in April. However, the White House announced last week that it had struck a deal with Beijing to accelerate rare earth mineral shipments to the U.S. “This signals a notable thaw in diplomatic tensions and a brief pause in the ongoing chip war,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
However, “there is no indication that controls imposed for national security reasons will be eased off for the likes of Nvidia and ASML,” Streeter added.
The Trump administration in May had placed export limits on Nvidia’s H20 artificial intelligence chip in an effort to stymie Beijing’s access to cutting-edge technology.