Cadence to Pay $140Million for Illegal China Tech Sales

Cadence Design Systems has agreed to plead guilty and forfeit more than $140 million to the US government for illegally selling chip design software and hardware to entities tied to the Chinese military. The Justice Department announced the settlement between Cadence and the US government on Monday during ongoing US-China trade negotiations, which included Export Control Laws.

Cadence and its China-based subsidiary exported electronic design automation (EDA) tools at least 56 times between 2015 and 2020 to CSCC – a front company believed to be acting on behalf of China’s National University of Defence Technology (NUDT). The NUDT has been on a US restricted trade list since 2015, and is believed to use US technology to conduct nuclear simulation research.

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According to court filings, although Cadence knew that CSCC was an alias for NUDT, some employees at Cadence China continued to transact with CSCC. The company also transferred tools to Phytium Technology, a semiconductor company believed to have ties to NUDT, without any proper export licenses.

Cadence said in a statement to regulators that they’re “pleased” to resolve the matter and recognised the legal charge in their most recent quarterly report. Cadence’s stock price increased by 6.5% subsequently to the announcement, due to the release of solid financial results, which were also announced alongside the settlement.