The United States lifted restrictions on exporting its chip-making software to China after the latter agreed to export more key minerals to America.
Synopsis, Cadence and Siemens, which collectively account for more than 90% of the electronic design automation (EDA) software market share in China, have been notified by the US Commerce Department to allow users in China to use their products, according to a Bloomberg report.
Shares of China’s Empyrean Technology, a key chip-making software supplier for Huawei Technologies, declined 3% to 115.68 yuan ($16.14) on Thursday. Empyrean has a market share of less than 10% in China.
The trade policy development followed the signing of a trade agreement between Washington and Beijing on June 25, which came after meetings between US and Chinese officials in London on June 8 and 9.
“China will approve the export application of controlled items that meet the conditions in accordance with the law. The US will cancel a series of restrictive measures taken against China accordingly,” the Chinese Ministry of Commerce said in a statement on June 27.
US Treasury Secretary Scott Bessent said Tuesday that he hopes the flow of Chinese mineral and magnet exports will increase.
“We are hoping they will flow at a faster rate,” Bessent said during an interview with Fox News. “Rare earth magnets are flowing. They are not flowing as they did before April 4, but we are confident that the Chinese will live up to their side of the deal.”
China’s EDA software
On May 12, the White House announced that the US and China had reached a trade agreement following meetings between their officials in Geneva. The US agreed to reduce its tariffs on Chinese goods from 145% to 30%. This includes a 10% tariff that most other countries face and a 20% tariff pending China’s effort to stop the exports of fentanyl precursors to America. China maintained a 10% tariff on all US imports.
While both countries de-escalated the trade war, the US pushed for a strategic decoupling with China to protect its steel, critical medicines and semiconductor sectors. At the same time, China refused to relax its key minerals export controls for the US.
On May 23, the US Commerce Department’s Bureau of Industry and Security (BIS) informed the EDA industry about its decision to restrict the sale of chip design software to China. The BIS has suspended existing export licenses or imposed additional license requirements.
Media reports stated that the new restrictions will not prevent Chinese firms from using American EDA software they already possess, but they will prohibit them from receiving updates and the technical support necessary to continue designing chips for manufacture in Taiwan.
Separately, the US suspended the sales of its critical technologies related to CFM International LEAP-1C engines to Chinese state-owned aerospace firms. The restriction affected the production of China’s Comac C919 aircraft.
In late May, the US and China accused each other of violating the Geneva agreement. However, China softened its stance in early June and resumed negotiations with the US. They reached a deal in London on June 8 and 9, but the US did not announce the details until this week.
Previously, some Chinese commentators have highlighted the significant impact of the United States’ EDA software ban on China.
”The export ban on EDA software to China is a core part of the United States’ suppression against China’s chip sector,” Zhong Xiaoguai, an Anhui-based columnist, says in an article on May 30. “It covers software tools that design mature chips over 14-nanometers, hitting all fabless Chinese chipmakers.”
“Although EDA is only a small part of the global chip sector, it is the core fulcrum for leveraging trillions of dollars of output value,” he added.
Zhong admitted that China’s EDA software will not be able to quickly compensate for the gap with Western EDA tools, although Semiconductor Manufacturing International Corp (SMIC) has gathered more than a hundred institutions to set up an EDA database.
“A chipmaker without EDA software is like an architect drawing skyscraper blueprints with bare hands,” Zuo Yifan, a Sichuan-based columnist, writes in an article published on June 6. “Chipmakers also need to use EDA software to resolve technical issues such as current leakage and signal crosstalk of the circuits.”
She said developers of China’s EDA software need foundries to provide them with process design kits (PDK), but SMIC failed to do so. She said most Chinese chip designers are only familiar with foreign software.
She said that if China wants to build another Synopsys, it should ensure that software engineers are well-paid, software firms have sufficient funding to remain unprofitable for more than three years, and EDA firms share data to form an ecosystem.
Key minerals
Now, the US can import more key minerals from China, while Chinese chipmakers can use US EDA software. However, it’s unclear whether such a deal will last long. Observers believe that the US will continue to diversify its key mineral sources.
India, Brazil, and Australia are emerging as new suppliers of rare earths for the US. If they succeed, they will create new competition for China’s rare earth suppliers.
According to the US Geological Survey, Brazil’s key mineral reserves are estimated at 21 million metric tons, while China’s are at 44 million metric tons. India has 6.9 metric tons, and Australia has 5.7 million metric tons.
Last month, the Brazilian government announced that it would allocate US$1 billion in public funding to initiate a series of strategic mineral projects. The country has one rare earth mine and will add two or three more by 2030.
Read: US-China tensions surge as tech and mineral wars intensify
20 years ago China would never have dared defy the US so brazenly, nor would Putin have slapped away the hand of a US president offering to broker a peace deal that sought to end a war. Iran would not have dreamed of attacking Israel in reprisal, and Japan would have swallowed our tariffs without so much as a peep. Times have changed dramatically, and power has shifted away from the US, irrevocably.
Old design that China had already stolen
There’s war and riots on the streets of western countries. There’s peace and tranquillity in China and Ray Ping of other nations by remote control as a result of this peace. The future looks like a one way street to China.
Is there? I hadn’t noticed.
Just like you probably noticed there are very few Uighurs on the street, they’ve all been imprisoned.
20 girls died in Texas floods. Shows that life is cheap in the west. Riots every other days, incompetence and negligence the next.
Many dead and 1000’s displaced in China floods 2 days ago.
Yes the girls in Tx made the news, while the Tiddly Winks didn’t. Too many of them, and hard to tell them apart.
😜😜😜 Roasted 🐓 like to believes in lies from USAID. 🤣🤣🤣
And you believe Winnie Xi Pooh?
Where is he, BTW? He’s not been seen in public for 2 months.
Nobody really knows what’s been agreed, but the Ray Ping of the US continues.
Old chip design that China already stole.
That’s the problem, Ray Ping. The Chinese are so small in that department that no one notices. It also explains why so many Chinese ladies prefer something bigger.
Even Japanese in Nanking – when Mao ran away !
George Washington fugiu de Nova York…
?? And in English
China struck a nerve with the rare earth metal ban. This is all but a temporary reprieve in Trump’s “trade wars are easy to win” saga. China will reach parity in semiconductor chips within the next few years, while the West scrambles to find rare metals. By 2035, the US public debt will be $70 trillion and we’re talking endgame to what was once known as the Anglo American empire. First they became intellectually, morally, culturally and spiritually bankrupt. Then they become financially bankrupt. Then militarily bankrupt. A scaling down of this imperial experiment is all but coming. Israel and Britain being the fleas on the sick American dog, will want to ‘jump ship’ but alas, nobody else in the world will want to host them. A return to reason and globalization will ensue.
Surely you know from your time in Qld that rare earths deposits are everywhere. The problem is the pollution in extracting them. US is developing less polluting ways to refine them. Leaving Peking polluted.
Who holds this debt? Alot of the worthless paper is in China. Added to their property and local debt, they are in Xi Pooh
Not true. Less than one trillion out of about 40 trillion is held by the Chinese. Most of the debt is held by American citizens and funds. The rest are held by Japan, Saudis and other Western sidekicks.
China’s debt to GDP is estimated at 85% (vrs USA or UK 100%) and that does not include all the debts of the local regions which the economist estimates pushes it up to 300%.
The USD reigns supreme (bad for the entire world including USA), but where is the alternative? Do the Big Men in Africa want to be paid in Yuan and buy a mansion in Peking?
Even the most optimistic experts project that several years are required to develop commercially viable refining of rare earths to partially supplant current supply.
I’m involved in resource extraction.
BTW did you also listen to ‘experts’ about covid and climate chaos?
😬😬 Mr. expert (roasted 🐓) rest 🌏 depends on 🇨🇳 for rare earths. Are you the one digging?
Coal?
Not for much longer…. Tiddly Wink REE are history.