Cadence fined $140m for China EDA sales
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Cadence Design Systems has been fined $140m for selling its EDA chip and system design tools to prohibited organisations in China.
The fine was agreed earlier this week with the US Department of Justice (DOJ) and the Bureau of Industry and Security (BIS) of the US Department of Commerce and covers a period from 2015 to 2021.
During this time, the company sold $45m of EDA tools to front companies for China’s National University of Defense Technology (NUDT), reports Reuters. The NUDT works on the Chinese nuclear programme. It also sold tools to Phytium Technology, which has close links to NUDT.
The details of the guilty plea came out in the latest quarterly figures, which saw revenue of $1.275bn, up from $1.061bn in Q2 2024.
“As previously disclosed, Cadence Design Systems, has been responding to subpoenas received from BIS in February 2021 and the DOJ in November 2023,” it said in a filing, “In December 2024, Cadence began discussions with BIS and the DOJ regarding their preliminary findings and a potential resolution.”
“Cadence is pleased to have reached these settlements and believes they are in the best interests of Cadence, its customers and its stockholders. Cadence has agreed to the terms of the settlement agreements at the parent corporate level to accept responsibility for the past conduct and to address the laws of both the United States and the People’s Republic of China. Since the conduct occurred, Cadence has further invested in and significantly enhanced its export compliance programs across its business, including implementing policies and procedures designed to proactively address evolving trade restrictions, and will continue to do so,” it said.
However the fine will not hit the results, as Cadence expects to benefit from approximately $140 million in reduced cash tax payments due to the immediate expensing of US R&D expenditures under the One Big Beautiful Bill Act.
Cadence has agreed to plead guilty to one count of conspiracy to commit export controls violations. The plea agreement has a three-year probationary term and includes obligations to implement additional export compliance programs and policies, including ongoing reporting and certification requirements and risk assessments, as well as obligations to cooperate in any ongoing or future investigations. The plea agreement is subject to court approval.
In addition, Cadence has entered into an administrative settlement agreement with BIS. Obligations under the administrative settlement agreement include two internal annual audits of Cadence’s export compliance programs. Compliance with the administrative settlement agreement is a condition to Cadence’s continued ability to export products.
“Cadence delivered an exceptional Q2, with 20% year-over-year revenue growth and stronger than expected bookings. This highlighted the strategic relevance of our AI-driven portfolio and the depth of our customer relationships,” said Anirudh Devgan, president and chief executive officer. “The strength and breadth of our products are enabling us to lead through the accelerating waves of the AI Supercycle, from AI infrastructure build-out, to physical AI in autonomous systems, to the emerging frontier of science AI.”
“I am pleased to report that Cadence delivered excellent results for Q2, with broad-based strength across all businesses, more than offsetting the impact of the temporary restrictions on exports to China imposed on May 23rd,” said John Wall, senior vice president and chief financial officer. “We are raising our 2025 revenue outlook to 13% growth year-over-year, and non-GAAP operating margin to 44%.”
The company launched its Cerebrus AI Studio, an agentic AI implementation platform delivering up to 20% PPA improvement and 5x to 10x faster chip delivery time. It also launched Millennium M2000 AI Supercomputer using Nvidia’s Blackwell GPU.
The System Design & Analysis business achieved 35% year-over-year revenue growth driven by Cadence’s multi-physics analysis platform and AI-driven optimization, which delivered superior results.
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