The Trump administration has ordered US semiconductor design software providers, including Cadence, Synopsys and Siemens EDA, to cease sales to Chinese companies in a bid to hinder China's development of advanced chip technology, multiple media sources now report.

The directive, issued by the Department of Commerce's Bureau of Industry and Security, aims to restrict China's progress in artificial intelligence chip manufacturing.

While Synopsys stated it hasn't received a formal notice according to a Reuters report citing the Financial Times, the company anticipates a decline in Chinese revenue. The move follows similar restrictions in April on exports of Nvidia’s China-specific AI chips and builds on the 2022 Biden-era limitations.

It is a move being closely watched in Taiwan where many of the world’s most advanced semiconductors are produced albeit one also facing US tariffs at present.

These actions highlight ongoing tensions despite a tentative trade truce between the US and China. Experts warn the ceasefire is fragile and at risk of unravelling. The restrictions particularly target Electronic Design Automation (EDA) software, a critical component in chip design, with US firms holding about 80% of China’s EDA market.

The announcement caused initial stock declines for Synopsys, Cadence and potential acquisition target Ansys. Meanwhile, Chinese EDA firms like Empyrean Technology, Primarius and Semitronix are expanding their market presence in response to the tightening US controls.