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US Commerce notifies companies of restrictions, sources

say

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New curbs affect machine tools, butane fuel, aviation

equipment

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Licenses needed to ship restricted products to China

(Adds additional sectors hit)

By Karen Freifeld

May 28 (Reuters) - The United States has ordered a broad

swathe of companies to stop shipping goods to China without a

license and revoked licenses already granted to certain

suppliers, said three people familiar with the matter.

The new restrictions - which are likely to escalate tensions

with Beijing - appear aimed at choke points to prevent China

from getting products necessary for key sectors, one of the

people said.

Products affected include design software and chemicals for

semiconductors, butane and ethane, machine tools, and aviation

equipment, the people said.

Many companies received letters from the U.S. Department of

Commerce over the last few days informing them of the new

restrictions.

Firms that supply electronic design automation (EDA)

software for semiconductors were sent letters last Friday that

licenses would now be needed to ship to Chinese customers, two

of the sources said.

The electronic design automation software makers include

Cadence, Synopsys ( SNPS ) and Siemens EDA, one said.

The two sources said the Commerce Department will review

requests for licenses to ship to China on a case-by-case basis,

suggesting the action was not an outright ban.

It is unclear whether the new restrictions are part of a

broader strategy to create leverage for trade talks during a

pause in the imposition of higher tariffs.

The Commerce Department said it is reviewing exports of

strategic significance to China, while noting "in some cases,

Commerce has suspended existing export licenses or imposed

additional license requirements while the review is pending."

The White House did not immediately respond to a request for

comment.

Shares of Cadence, which declined to comment, closed down

10.7% and shares of Synopsys ( SNPS ) fell 9.6%.

Synopsys' ( SNPS ) CEO Sassine Ghazi said in a call with analysts

that the company had not received a letter nor had it heard from

the Commerce Department's Bureau of Industry and Security, which

enforces export controls.

"We are aware of the reporting and speculations, but

Synopsys ( SNPS ) has not received a notice from BIS ... We have not

received a letter," Ghazi said.

After the market closed, Synopsys ( SNPS ) reaffirmed its revenue

forecast for 2025. Its shares and those of Cadence bounced back

3.5% in trading after the close.

Siemens EDA did not immediately respond to a request for

comment.

Any move to strip the software makers of their Chinese

customers could deal a blow to their bottom line and to their

Chinese chip design customers, which heavily rely on

top-of-the-line U.S. software.

"They are the true choke point," said a former Commerce

Department official, who added that rules restricting the export

of EDA tools to China have been under consideration since the

first Trump administration, but were ruled out as too

aggressive.

Synopsys ( SNPS ) relies on China for about 16% of its annual

revenue, and China accounts for about 12% of annual revenue for

Cadence.

Synopsys ( SNPS ), which partners with chip companies such as Nvidia ( NVDA )

, Qualcomm ( QCOM ) and Intel ( INTC ), provides

software and hardware used for designing advanced processors.

The Financial Times earlier reported that the Trump

administration had ordered the software firms to stop selling

their services to Chinese groups.