Sassine Ghazi, CEO of semiconductor design software firm Synopsys, explains the company’s plans to have artificial intelligence take over parts of designing computer chips at the company’s annual user conference in Santa Clara, California, on March 19, 2025.
Stephen Nellis | Reuters
Synopsys pulled its guidance for the full fiscal year on Thursday, citing a letter it received from the U.S. Commerce Department on restrictions of sales of its products in China. The stock closed down 1.6%.
The announcement comes one day after Synopsys CEO Sassine Ghazi disputed a report that the White House told the company, as well as rivals Cadence and Siemens, to stop selling to clients in China. He said he had wanted to address the swirling of speculation.
“Synopsys is currently assessing the potential impact of the BIS Letter on its business, operating results and financial condition,” the company said in a statement on Thursday.
On a conference call with analysts on Wednesday, Ghazi had said the company saw a slowdown in China during its fiscal second quarter, which ended on April 30. Around 10% of Synopsys’ $1.6 billion in quarterly revenue came from customers in China.
Competition in China is fierce. Synopsys has said the Chinese government has put in place policies that favor its own companies and has backed investment funds while looking to develop independent chip design know-how.
“Recall as we started sometime in FY 2024 communicating that we are seeing both a cumulative impact of the restrictions in China as well as the macro situation inside China have caused us to continue on communicating that this deceleration will continue, and that headwind has gotten stronger as we go through the each quarter over the last year, year and a half,” he said. The 2025 fiscal year ends in October.
The Bureau of Industry and Security informed Cadence last week that the company will need a license to export its chip design software to customers in China, according to a Thursday filing.
“The letter stated that BIS has determined that these shipments pose an unacceptable risk of use in or diversion to a ‘military end use’ in China or for a Chinese ‘military end user,'” Cadence said.
WATCH: Synopsys suspends Q3 and FY 2025 guidance a day after providing it
