Cadence Design Soars 5.91% on U.S.-China Trade Truce

On July 3, 2025, Cadence Design's stock surged by 5.91% in pre-market trading, reflecting a significant boost in investor confidence.

The recent lifting of U.S. export restrictions on chip design software to China has had a profound impact on Cadence Design Systems. This move, part of a broader trade truce between the U.S. and China, has opened up new opportunities for the company to resume sales of critical software used in designing advanced chips. This includes everything from AI accelerators to 5G components, which are in high demand in the Chinese market.

For Cadence Design, this development is particularly significant as it allows the company to regain access to a critical market. The lifting of these restrictions is expected to drive a rebound in revenue, especially in the third quarter of 2025. Analysts predict that this could result in a 5-7% increase in revenue for the company, driven by the resumption of sales to Chinese foundries such as SMIC.

Additionally, the trade truce has eased geopolitical tensions, creating a more stable environment for companies like Cadence Design to operate. The U.S. and China have agreed to a temporary suspension of retaliatory measures, which includes China expediting rare earth exports to the U.S. This de-escalation of tech conflicts is a positive tailwind for EDA stocks, including Cadence Design.

Furthermore, the pending Synopsys-Ansys merger, valued at $35 billion, is nearing regulatory completion. This merger, which involves the integration of Ansys's simulation tools with Synopsys's design software, could unlock new innovation in AI-driven chip design. The lifting of export restrictions could accelerate the approval process for this merger by China's State Administration for Market Regulation (SAMR), further benefiting Cadence Design.