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The Trump administration has moved to block some American companies from selling important software used to design computer chips to China.

This new rule, reported by the Financial Times, affects companies like Cadence, Synopsys, and Siemens EDA.

The government's decision aims to slow China's ability to make advanced technology, especially for artificial intelligence and other high-tech uses.

According to CNN, the US Commerce Department confirmed it is "reviewing exports of strategic significance to China." Some export licenses have been suspended or now require extra approval while the review continues.

Siemens said it was informed last week about these new controls and will work with customers worldwide to reduce the impact while following the rules.

This move comes during a fragile pause in the ongoing trade war between the US and China.

Earlier this month, officials from both countries agreed in Geneva to reduce tariffs for 90 days and try to negotiate a longer trade deal. But this new export control shows there are still tensions between the two powers.

Christopher Johnson, a former CIA China expert, said these restrictions reveal how delicate the current trade peace is. "The risk the ceasefire could unravel even within the 90-day pause is omnipresent," he said.

China Condemns US Export Controls, Promises Strong Response

The software affected is called electronic design automation (EDA), which helps engineers create and test new chips.

Though it is a small part of the entire chip industry, EDA is very important for building the latest, most powerful computer chips. The three companies impacted hold about 80% of China's market for this software.

Synopsys earned nearly $1 billion from China last year, about 16% of its total sales. Cadence made around $550 million, or 12% of its revenue, from Chinese customers, Financial Times said.

After news of the export limits, Synopsys shares fell almost 10%, and Cadence shares dropped more than 10%.

Siemens, which has supported Chinese customers for over 150 years, said it will comply with the new rules and work to reduce their effect on clients.

China's embassy in the US criticized the restrictions, saying they "abuse export controls" and harm Chinese companies. A spokesperson added that China will "take resolute measures" to protect its interests.

These restrictions follow earlier steps by the Trump administration, such as banning China's Huawei from using American chip design tools.

The aim is to keep America ahead in technology by stopping China from getting the latest software and hardware.

At the same time, China's local companies in chip design have been growing, gaining more market share in response to the US controls. Shares of Chinese firms Empyrean, Primarius, and Semitronix rose over 10% in early trading this week.

Tags

Trump Administration, China