July 2 (Reuters) - U.S. chip design software developers

said they have received notices lifting restrictions on exports

to China, in a signal that the two largest economies had settled

a dispute over rare earths that had undermined a trade deal

reached in May.

Synopsys ( SNPS ) and Cadence Design Systems ( CDNS ), two

of the world's largest electronic design automation (EDA)

software developers, said they were restoring access to their

software and technology for customers in China.

A letter from Synopsys ( SNPS ) to staff seen by Reuters said the

developer expects to complete system updates to restore access

and support to Chinese customers within three business days.

Rival Siemens received a similar notice, Bloomberg reported.

The German tech company and the U.S. Department of Commerce

did not immediately respond to Reuters' requests for comment.

Earlier on Wednesday, the U.S. sent letters to ethane

producers to rescind a restrictive licensing requirement on

exports to China imposed last month.

TIT-FOR-TAT

China in April responded to U.S. export curbs by suspending

exports of a range of rare earths and related magnets, upending

supply chains central to automakers, aerospace manufacturers,

semiconductor companies and military contractors worldwide.

The issue threatened to scupper a trade deal that China and

the U.S. were negotiating in May to lower tit-for-tat tariffs.

As China and the United States wrangled over rare earths and

magnets access, the U.S. curbed aviation exports including

suspending licenses for GE Aerospace to ship jet engines for the

C919 aircraft of Chinese airplane maker COMAC.

The U.S. also suspended licenses for nuclear equipment

suppliers to sell to Chinese power plants and restricted exports

including from Synopsys ( SNPS ), Cadence and Siemens EDA.

The trio control more than 70% of China's EDA market,

Chinese state news agency Xinhua reported in April.

On Friday, China's commerce ministry said that following

talks with the U.S., the pair confirmed a framework under which

China will review export applications for controlled items while

the U.S. will cancel corresponding restrictive measures.

Long-term restrictions on Chinese access to EDA software

would have significantly hampered China's chip design industry.

Synopsys ( SNPS ) suspended its annual and quarterly earnings

forecasts after the U.S. implemented the restrictions.