US Oks Chip Design Software For China After A Key Minerals Deal

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On May 12, the White House announced that the US and China had reached a trade agreement following meetings between their officials in Geneva. The US agreed to reduce its tariffs on Chinese goods from 145% to 30%. This includes a 10% tariff that most other countries face and a 20% tariff pending China's effort to stop the exports of fentanyl precursors to America. China maintained a 10% tariff on all US imports.

While both countries de-escalated the trade war, the US pushed for a strategic decoupling with China to protect its steel, critical medicines and semiconductor sectors. At the same time, China refused to relax its key minerals export controls for the US.

On May 23, the US Commerce Department's Bureau of Industry and Security (BIS) informed the EDA industry about its decision to restrict the sale of chip design software to China. The BIS has suspended existing export licenses or imposed additional license requirements.

Media reports stated that the new restrictions will not prevent Chinese firms from using American EDA software they already possess, but they will prohibit them from receiving updates and the technical support necessary to continue designing chips for manufacture in Taiwan.

Separately, the US suspended the sales of its critical technologies related to CFM International LEAP-1C engines to Chinese state-owned aerospace firms. The restriction affected the production of China's Comac C919 aircraft.

In late May, the US and China accused each other of violating the Geneva agreement. However, China softened its stance in early June and resumed negotiations with the US. They reached a deal in London on June 8 and 9, but the US did not announce the details until this week.

Previously, some Chinese commentators have highlighted the significant impact of the United States' EDA software ban on China.

”The export ban on EDA software to China is a core part of the United States' suppression against China's chip sector,” Zhong Xiaoguai, an Anhui-based columnist, says in an article on May 30.“It covers software tools that design mature chips over 14-nanometers, hitting all fabless Chinese chipmakers.”

“Although EDA is only a small part of the global chip sector, it is the core fulcrum for leveraging trillions of dollars of output value,” he added.

Zhong admitted that China's EDA software will not be able to quickly compensate for the gap with Western EDA tools, although Semiconductor Manufacturing International Corp (SMIC) has gathered more than a hundred institutions to set up an EDA database.

“A chipmaker without EDA software is like an architect drawing skyscraper blueprints with bare hands,” Zuo Yifan, a Sichuan-based columnist, writes in an article published on June 6.“Chipmakers also need to use EDA software to resolve technical issues such as current leakage and signal crosstalk of the circuits.”

She said developers of China's EDA software need foundries to provide them with process design kits (PDK), but SMIC failed to do so. She said most Chinese chip designers are only familiar with foreign software.