The Microsoft Office of Chip Design Just Got Hit by China Restrictions — Stocks Drop

We’re no stranger to sudden policies restricting western companies from dealing with China.

The latest to be caught in the crosshairs are Synopsys and Cadence, two critical players in the semiconductor ecosystem, now facing export restrictions to China. Following the announcement, both stocks dropped more than 6%.

Most investors may not be familiar with Synopsys and Cadence, unlike more well-known names like Nvidia or TSMC in the semicondcutor world. But without these two companies’ software, chips as we know them wouldn’t exist.

These are the companies behind Electronic Design Automation (EDA) — the software that enables chip design, much like Photoshop does for creatives. From Nvidia to Apple, chip designers rely on these tools to build cutting-edge products like the H100 and M-series chips. Synopsys and Cadence are the enablers behind the enablers.

So when their stocks dropped, we naturally considered whether an opportunity had emerged.