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Chinese high-tech companies designing their own advanced chips for manufacturing in Taiwan are set to be the hardest hit by new US restrictions on software tools.
After the US directive last month directed the Electronic Design Automation (EDA) group to supply the technology to China, people with knowledge of the issue say smartphone maker Xiaomi is in the first line to be affected.
Xiaomi unveiled its groundbreaking self-designed mobile processor in May. The chip is built in Taiwan, located on cutting edge 3-nanometer nodes and is currently a mixture of licenses and tools from US EDA companies.
The world’s third largest smartphone manufacturer has spent years developing its own silicon produced by Taiwanese semiconductor manufacturers. Xiaomi chair Lei Jun said at the launch event that the new Xring O1 chip will be used on the group’s latest smartphones.
Such chips initially constitute only a small portion of mobile phone sales, but according to people familiar with the company’s plans, he expects to use them on all high-end smartphones and tablets in the future.
According to industry insiders, other Chinese companies include Lenovo and Bitcoin Mining Specialist Bitmain, the world’s largest computer manufacturers, using US EDA tools and TSMC’s contract manufacturing for TSMC’s self-designed chips.
Xiaomi, Lenovo, and Bitmain did not respond to requests for comment.
Although no details of the ban have been released yet, it is unlikely that an existing license will be revoked. Instead, important technical support is important so that Chinese companies will be detached from future updates and chips will continue to be manufactured in factories in Taiwan that use modern US systems.
TSMC effectively bans the creation of advanced AI chips for Chinese companies by US restrictions, but smartphone and tablet categories, as well as other advanced processors, are generally exempt.
Large Chinese technology groups such as Alibaba and Baidu have also designed their own chips, but the impact of the EDA ban on them is currently unknown.
The latest move by the Office of Industry and Security, a division of the US Department of Commerce that oversees export control, will further tighten the limits of the chip industry to design software and limit China’s ability to develop advanced technologies.
However, some industry observers argue that the restrictions could have been too slow as Chinese EDA manufacturers, led by Empierian Technology, are already developing a rival ecosystem of software that Chinese chipmakers use more and more.
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Huawei, a Chinese high-tech group that has been under US sanctions since 2019, has invested heavily in developing its own EDA tools in its CHIP development work, helping local suppliers such as Empyrian build alternatives.
These are less mature than EDA supplier overviews and US Cadence products, but are “usable” especially for chip production above 7nm.
A new ban means that empyrean can expect higher demand for software tools that cover the complete circuit design process, such as editing, simulation, and optimization. Primarius Technologies is another Chinese EDA provider, while Semitronix specializes in electrical testing to improve production yields. All three stocks jumped after the Financial Times reported new restrictions.
Meanwhile, Chinese startups are using localized versions of Hacked US EDA software.
“It’s very easy to hack into a system to get the support you need, and above that there’s the underlying algorithms to build innovation,” said a semiconductor analyst who rejected the name.
“This is why Synopsys and Cadence have weaker demand in China than capacity growth. Many customers use it without paying,” he added.
The latest US restrictions are expected to encourage more Chinese companies to use hacked software and switch to local suppliers of both EDA and chip manufacturing.
Additional Reports by Ryan McMorrow of Beijing
