President Donald Trump's administration has ordered U.S. firms that offer software used to design semiconductors to stop selling their services to Chinese groups, the Financial Times reported on Wednesday, citing several people familiar with the move.
Electronic design automation software makers, which include Cadence (CDNS.O), Synopsys (SNPS.O) and Siemens EDA, were told by the Commerce Department to stop supplying their tech, the report said.
Shares of Cadence closed down 10.7% and Synopsys ended off 9.6%.
The Trump administration has taken an aggressive approach to competition from China, threatening massive tariffs on Chinese products amid reports of more targeted restrictions aimed at hobbling its ability to make the most sophisticated AI chips.
A spokesperson for the Commerce Department said it is reviewing exports of strategic significance to China, while noting "in some cases, Commerce has suspended existing export licenses or imposed additional license requirements while the review is pending."
Synopsys relies on China for about 16% of its annual revenue, while China accounts for about 12% of annual revenue for Cadence.
Cadence declined to comment, while Synopsys and Siemens EDA did not immediately respond to requests for comment.
The Bureau of Industry and Security issued the directive to the companies, according to people cited in the Financial Times report.
A former Commerce Department official said rules restricting the export of EDA tools to China have been under consideration since the first Trump administration, but were ruled out as too aggressive.
"They are the true choke point," the person said.
