Cadence Design Systems, a major developer of chip design software and hardware, said it would pay $140.6 million (£105.3m) to US authorities to settle allegations that it illegally exported products to restricted Chinese companies between 2015 and 2021.

The settlement, which was also announced by the US Justice Department, involves a case that began more than four years ago with claims that Cadence sold products to front companies representing China’s National University of Defence Technology (NUDT).

The university is on the US’ Entity List trade blacklist, meaning a licence is required for US companies to sell to it.

Settlement

In a US Securities and Exchange Commission filing, Cadence said it was “pleased” to reach the settlement.

The Chinese National University of Defence Technology, or NUDT, is known for developing massive supercomputers, including the Tianhe-2, which in 2013 was ranked as the fastest such system in the world.

The university was placed on the Entity List in 2015 to ensure that its supercomputers were not built using American technology.

Cadence and its subsidiary Cadence China exported electronic design automation tools at least 56 times to an entity called CSCC between 2015 and 2020, with some Cadence China employees facilitating the sales while knowing that CSCC was an alias for NUDT, court papers said.

CSCC was one of several other aliases and locations for NUDT that were placed on the Entity List from 2019 to 2022, with others being Hunan Guofang Keji University and Central South CAD Centre.

Cadence and Cadence China also allegedly transferred EDA tools to Phytium Technology, a chip company closely associated with NUDT, until 2021 without required licences.

As part of the settlement Cadence agreed to plead guilty to one count of conspiracy to commit export control violations.

The company is expected to be on probation for three years, meaning it cannot commit any further violations and must fulfil other obligations under the plea agreement.

Trade tensions

Under the deal the company also agreed to implement further export law compliance measures and submit to annual audits.

The sales amounted to some $43.5m in total.

Cadence and fellow US-based EDA provider Synopsys were both affected by export laws imposed in May that prevented them from selling to China, a market that accounts for a substantial portion of global sales for the sector’s largest players.

The restrictions were lifted earlier this month as trade negotiations continue between China and the US.

Mizuho analysts estimated last week that Cadence took a $56m charge as a result of the restrictions, but anticipated its revenue from China would soon return.