“With software being the cornerstone from design, development to management of hardware systems globally, further tighter export controls will escalate and accelerate this dichotomous trend further,” said Neil Shah, VP for research at Counterpoint Research. “Most of the major and advanced EDA design tools, compute designs, software stacks, and operating systems come from US-based companies. So, the reliance is high, but building a parallel software ecosystem is costly, unwarranted, and could create some serious challenges.”
In May, Washington had already tightened oversight of electronic design automation (EDA) software sales, requiring leading vendors such as Cadence, Synopsys, and Siemens EDA to obtain export licenses before selling to Chinese firms. Earlier this month, President Trump announced on social media that he plans to double tariffs on Chinese exports to the US and introduce new export restrictions on what he called “critical software” by November 1.
Impact on supply chains
Analysts point out that the restriction will introduce further fragmentation into the tech supply chain and add additional compliance requirements to US-based enterprises. More importantly, it will severely impact the revenue of major Western tech firms that have been relying on China for growth, according to Lian Jye Su, chief analyst at Omdia.
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