Cadence Design to Pay $140M in U.S. Export Violation Case Linked to China’s Military University

Cadence Design Systems will plead guilty and pay over $140 million to settle U.S. charges of illegally exporting chip design software and hardware to a Chinese military-linked university, the Justice Department announced Monday. The San Jose-based company was accused of selling electronic design automation (EDA) tools to front companies connected to China’s National University of Defense Technology (NUDT), which is believed to develop supercomputers for nuclear and military simulations.

NUDT, blacklisted by the U.S. Commerce Department since 2015, operates under aliases including Hunan Guofang Keji University and Central South CAD Center. Court filings revealed Cadence and its China subsidiary conducted at least 56 transactions with these entities between 2015 and 2020 and also transferred tools to Phytium Technology, another restricted company.

Under the plea deal, Cadence will face three years’ probation and pay combined criminal and civil penalties, including forfeiture. The company stated it was “pleased” to resolve the matter as it reported quarterly earnings, which sent its shares up 6.5%.

Cadence’s customers include major semiconductor players such as Nvidia and Qualcomm. The investigation began in 2021 with a Commerce Department subpoena, later followed by the Justice Department. The company’s former longtime CEO, Lip-Bu Tan, who now leads Intel, oversaw Cadence during the period in question but has not commented.

The case underscores Washington’s strict enforcement of export controls on sensitive U.S. technology, even as trade negotiations with China continue. EDA tools are essential for designing advanced chips, including those powering Tianhe-2, a supercomputer tied to nuclear research. China accounted for 12% of Cadence’s revenue in 2024, down from 17% in 2023 amid tightening U.S.-China tech tensions.