Cadence Design Systems Settles $140M Penalty for Unlawful China Sales, Reports Strong Q2 Earnings

Cadence Design Systems (CDNS) agreed to plead guilty and pay $140mln to settle charges related to China sales. Q2 revenue rose to $1.28bln, beating estimates, driven by a 25% increase in intellectual property revenue and a 16% increase in electronic design software. The company raised its full-year earnings forecast and CDNS stock gained 8%.

Cadence Design Systems (CDNS), a leading provider of electronic design automation (EDA) software, has agreed to plead guilty and pay a $140.6 million penalty to settle charges related to the illegal sale of its software to Chinese customers. The company also reported strong second-quarter (Q2) financial results, with revenue rising to $1.28 billion, beating analysts' estimates. The intellectual property (IP) revenue and electronic design software revenue both saw significant increases, contributing to the company's overall performance.

The settlement comes as the U.S. and China engage in new trade talks, highlighting the ongoing tensions between the two countries in the technology sector. Cadence was accused of violating export controls by selling its chip design software and hardware to front companies representing China's National University of Defense Technology (NUDT). The university's supercomputers are believed to support nuclear explosive simulation and military activities [1].

Despite the settlement's impact on its bottom line, Cadence has increased its full-year earnings forecast. The company now expects annual revenue between $5.21 billion and $5.27 billion, up from its earlier forecast and above analyst estimates of $5.20 billion [2]. Cadence's shares rose 7% in extended trading on the news [2].

Cadence's Q2 performance was driven by a 25% increase in IP revenue and a 16% increase in electronic design software revenue. The company's system design and analysis business unit saw a 35% year-over-year growth, while its IP business experienced a 25% increase in sales [2]. The company's net income for the quarter decreased to $160 million from $230 million a year ago, primarily due to the settlement with the U.S. government [2].

Cadence's optimistic outlook is supported by the growing demand for AI chips and its strong position in the EDA market. With the resumption of sales to China and the settlement of export violation charges, Cadence appears well-positioned to capitalize on the expanding semiconductor industry and the increasing need for advanced chip design tools [2].

References:

[1] https://www.reuters.com/world/china/cadence-plead-guilty-pay-140-million-us-china-sales-2025-07-28/
[2] https://theoutpost.ai/news-story/cadence-design-systems-raises-forecasts-amid-export-curb-lift-and-settles-export-violation-case-18331/