The United States has imposed new export restrictions on China, requiring licenses for semiconductor design software, chemicals, and other critical materials as tensions escalate between the world’s two largest economies.

What Happened: The Commerce Department notified companies over recent days about expanded controls affecting electronic design automation (EDA) software, butane and ethane chemicals, machine tools, and aviation equipment, Reuters reported, citing sources.

The restrictions target strategic chokepoints to limit China’s access to products essential for key technology sectors.

Major EDA software providers Cadence Design Systems Inc. ( CDNS ) and Synopsys Inc. ( SNPS ) face significant exposure. Cadence shares plunged 10.7% following the news, while Synopsys ( SNPS ) dropped 9.6% before recovering 3.5% in after-hours trading, according to data from Benzinga Pro.

“We are aware of the reporting and speculations, but Synopsys ( SNPS ) has not received a notice from BIS,” CEO Sassine Ghazi told analysts, referring to the Commerce Department’s Bureau of Industry and Security, the report noted. The company maintained its 2025 revenue forecast despite market volatility.

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Why It Matters: The Commerce Department confirmed it is “reviewing exports of strategic significance to China” and has “suspended existing export licenses or imposed additional license requirements while the review is pending.” Officials indicated license requests will be evaluated case-by-case basis rather than implementing an outright ban.

The timing reflects President Donald Trump‘s continued pressure on China following his January inauguration. Investor Ross Gerber criticized the approach, stating Trump is “basically destroying” Nvidia Corp. ( NVDA )‘s China business.

However, Deepwater Asset Management‘s Gene Munster urged investors to focus on core AI growth, noting Nvidia’s business remains “on fire” despite Chinese restrictions.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.