Synopsys Inc, the biggest supplier of software used to design semiconductors, is under investigation by the US Department of Commerce for possibly passing key technology to banned Chinese companies, people familiar with the matter have said.
Investigators are looking into allegations that Synopsys, working with affiliates in China, provided chip designs and software to Huawei Technologies Co’s (華為) Hisilicon Technologies Co (海思半導體) unit for chip production at Semiconductor Manufacturing International Corp (SMIC, 中芯國際), said the people, who asked not to be identified because details of the process have not been made public.
US companies are barred from selling some types of technology to Huawei and SMIC because they have been designated as threats to national security by the US Bureau of Industry and Security (BIS).
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Synopsys in December last year disclosed that it had received a subpoena from the bureau relating to “transactions with certain Chinese entities,” without specifying when it received the request or providing further details.
At the time, the company said it was in compliance with all regulations and was working to respond to the inquiry.
Synopsys declined to comment beyond that initial disclosure.
The situation highlights the difficulties US companies are facing amid the escalating rivalry between their home country and China, which is the largest and fastest-growing market for their technology. To keep investors happy, businesses need to tap that opportunity without running afoul of increasing restrictions from regulators.
In Washington, there is a vocal lobby calling for more measures, such as the US entity list, to block Beijing’s attempts to build up its domestic chip industry, and to thwart what some see as attempts by China to use illicit means and billions in government money to achieve that independence.
For its part, China has threatened to impose its own measures on overseas companies that get in the way of its efforts, even when they are doing so to comply with new rules in the US.
California-based Synopsys and its rival Cadence Design Systems Inc dominate the market for software used to design semiconductors. Their products are essential for Chinese chipmakers trying to lead Beijing’s push to make the country more self-reliant in electronic components.
“While the department does not comment on the potential existence of investigations, BIS vigorously investigates allegations of violations of the Export Administration Regulations, including attempts to transfer controlled items or technologies to or among parties on the Entity List,” the bureau said in a statement. “Any enforcement action resulting from an investigation is made public after that investigation has concluded.”
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