US Lifts Chip Design Software Curbs on China in Trade Deal

Key Points

Research suggests the US has lifted export restrictions on chip design software to China as part of a recent trade deal.
It seems likely that this is part of a broader agreement involving China exporting rare earth minerals to the US, with the deal set to expire in August 2025.
The evidence leans toward this being a temporary de-escalation, with high tariffs still in place, indicating ongoing tensions.

Background

The US and China have been engaged in a trade war, with restrictions on technology exports, including chip design software, being a significant point of contention. Recent developments suggest a temporary easing of tensions through a trade deal.

Details of the Deal

The US has lifted export curbs on Electronic Design Automation (EDA) software, critical for chip design, affecting companies like Synopsys, Cadence, and Siemens. In return, China has agreed to approve and speed up rare earth exports to the US.

Implications

This move is seen as a step toward de-escalating trade tensions, but the deal does not address high tariffs, and its temporary nature suggests uncertainty for the future.

Supporting URLs

Survey Note: Detailed Analysis of US Lifting Chip Design Software Curbs on China in Trade Deal

This section provides a comprehensive examination of the recent trade deal between the United States and China, focusing on the US lifting export restrictions on chip design software. The analysis is grounded in recent news reports, official statements, and economic data, ensuring a thorough understanding of the developments as of 02:22 AM PDT on Thursday, July 3, 2025.

Background and Context

The US and China have been engaged in a protracted trade war, with significant focus on technology and the semiconductor industries. The US has imposed various export controls, including on Electronic Design Automation (EDA) software, which is critical for chip design, as part of efforts to limit China’s technological advancement. These restrictions, imposed in May 2025, were a retaliation for China’s export controls on rare earth minerals and related magnets, which China controls approximately 90% of globally, as noted in reports from CNN and Reuters.

Recent economic trends, including shifting supply chains and ongoing trade disputes, have shaped these negotiations. The US has maintained high tariffs on Chinese goods, reaching 145% at one point, now reduced to 55% in some cases, while seeking to diversify trade partners and secure critical supply chains, particularly for technology and minerals.

Details of the Trade Deal

On July 3, 2025, multiple sources, including CNN, Reuters, The Information, and CNBC, reported that the US has lifted its export restrictions on chip design software to China as part of a recent trade deal. The key details include:

US Action: The US Commerce Department notified companies that export curbs on EDA software, which includes tools for designing and verifying integrated circuits, have been lifted. This affects major players in the industry, including Synopsys, Cadence Design Systems (both US-based), and Siemens (Germany-based), which together control over 70% of China’s EDA market, according to an Xinhua report from April 2025.
Chinese Action: In return, China has agreed to approve and speed up export applications for rare earth minerals and related products to the US under the current licensing regimes. This addresses a critical supply issue, given China’s dominance in rare earth processing, as reported by CNN.
Framework Agreement: The deal is part of a broader trade framework formalised last week, following a 90-day trade truce initiated after talks in Geneva in May 2025. This truce, set to expire in August 2025, includes commitments to review export applications and cancel corresponding restrictive measures, as detailed in the Reuters article.
Company Responses: Synopsys and Cadence are restoring access to their previously restricted software for Chinese customers, with Synopsys expecting to complete this within three business days, as mentioned in the Reuters report. Siemens has also restored full access and resumed sales and support to Chinese customers, according to statements from the company.
Previous Restrictions: The US had cut off sales of critical EDA software to China in May 2025, part of a broader retaliation for China’s April 2025 imposition of new licensing on seven types of rare earth minerals and magnets, as noted in the CNN article. These restrictions were seen as significantly hampering China’s chip design industry, given the reliance on US and allied software.

The following table summarises the key aspects of the deal:

Aspect	Details
US Action	Lifted export curbs on EDA software (chip design tools) to China
Chinese Action	Agreed to approve and speed up rare earth exports to US under current regimes
Companies Affected	Synopsys, Cadence (US), Siemens (Germany) – control >70% of China’s EDA market
Timeframe	Deal formalized last week, truce expires August 2025; Synopsys restores access within 3 business days
Context	Part of 90-day trade truce after Geneva talks in May 2025, retaliation for China’s rare earth controls
Tariffs	US tariffs on China remain at ~55%, China’s on US at 10%, not addressed in deal

Implications and Market Reactions

The lifting of chip design software curbs is seen as a significant de-escalation of US-China trade tensions, particularly in the technology sector. Social media reactions on X, including posts from @StockSavvyShay and @AIStockSavvy, highlight the market interest, with mentions of companies like Synopsys ($SNPS) and Cadence ($CDNS) resuming sales, and some speculation about impacts on NVIDIA ($NVDA), though NVIDIA is not directly mentioned in the deal details. The market response suggests investor enthusiasm for reduced trade barriers, but the temporary nature of the truce and unresolved tariffs indicate ongoing uncertainty.

The deal addresses critical supply chain issues, with rare earths being essential for various high-tech industries, including semiconductors and defence. However, the long-term impact on China’s chip design industry, which relies heavily on EDA software, remains to be seen, especially given the potential for future restrictions if the truce expires without a permanent agreement.

Methodological Considerations and Supporting Data

The analysis is derived from recent news reports from CNN, Reuters, The Information, CNBC, and social media posts on X, which provide official statements, market data, and negotiation updates. For instance, US Commerce Department notifications and company statements from Synopsys and Siemens were used to confirm the lifting of curbs. Market reactions were tracked through social media and news articles, acknowledging the complexity of trade negotiations and potential for deviation from expected outcomes.

Potential Influences and Uncertainties

Several factors may influence the outcomes of this deal:

Truce Expiry: The current agreement is set to expire in August 2025, and without a permanent deal, restrictions could be reimposed, affecting both parties.
Regulatory Scrutiny: The lifting of curbs may face domestic scrutiny in the US, particularly from lawmakers concerned about national security and technology transfer to China.
Market Volatility: The deal’s temporary nature and unresolved tariffs could lead to volatility in technology stocks, especially for companies like Synopsys, Cadence, and Siemens, which are directly affected.
China’s Compliance: China’s ability and willingness to expedite rare earth exports under the current regime will be critical, given past tensions and export controls.

Comparative Analysis

The following table compares the current deal with previous US-China trade interactions:

Aspect	Current Deal (July 2025)	Previous Interactions (May 2025)
Chip Software Curbs	Lifted for EDA software	Imposed, cutting off sales to China
Rare Earths	China agrees to speed up exports to US	China imposed new licensing, restricting exports
Tariffs	Not addressed, remain at ~55% (US) and 10% (China)	High tariffs (US 145%, now 55%), retaliatory measures
Duration	Part of 90-day truce, expires August 2025	Ongoing, part of broader trade war

Economic and Geopolitical Implications

The lifting of chip design software curbs highlights the dynamic between technological competition and economic strategy, with potential long-term impacts on global semiconductor supply chains. China is bracing for these developments through negotiations and potential countermeasures, underscoring the stakes for its technological ambitions, particularly in chip design. The situation reflects a fragmented trade landscape, with significant implications for international relations and market access.

Conclusion

Research suggests that the US has lifted export restrictions on chip design software to China as part of a recent trade deal, with China agreeing to expedite rare earth exports in return. It seems likely that this is a temporary de-escalation, part of a 90-day truce set to expire in August 2025, with high tariffs still in place, indicating ongoing tensions. The evidence leans toward this being a significant step for technology sector de-escalation, affecting major EDA companies, but with uncertainties around its longevity and broader trade relations. The analysis reflects the complexity of US-China trade dynamics, acknowledging potential economic and geopolitical implications for all stakeholders.

Supporting URLs:

• • The Information: US Lifts Chip Design Export Curbs on China