(Reuters) -Shares of Synopsys fell nearly 35% on Wednesday, erasing the chip design software provider's 2025 gains, as Sino-U.S. trade tensions hurt its quarterly revenue and left investors mulling the future of its China business.

Successive U.S. administrations have attempted to restrict Beijing's access to American chip technology, limiting U.S. firms' reach into a key semiconductor market. This has hurt Synopsys, which provides software for designing complex processors.

The company reported revenue of $1.74 billion for the third quarter ended July 31, missing analysts' estimates according to LSEG data, due to weakness in its IP business.

CEO Sassine Ghazi on Tuesday attributed this to export restrictions disrupting business in China and challenges at a major foundry customer.

The company faced over a month of U.S. export curbs on chip design software to China, essentially cutting off the market that brings over 10% of revenue for major industry players.

The restrictions, placed in late May, were ultimately lifted in July, but tariff uncertainty persists.

While Ghazi did not name the foundry customer, Intel, a long-standing Synopsys patron, has significantly pared back its chip manufacturing ambitions and slowed down or canceled various foundry projects.

Shares of peer Cadence Design Systems fell nearly 7%.