Cadence Design Systems has agreed to pay $140 million in fines for illegally sharing Electronic Design Automation hardware and software, as well as semiconductor design technology, with a Chinese military university. The Department of Commerce said the fine comprises $95 million from the Bureau of Industry and Security and an additional $45 million in forfeitures resulting from a judgment by the Department of Justice.
Cadence is known for producing electronic computer-aided design software.
“Companies that violate export laws and compromise national security should face strong penalties that deter future wrongdoing,” Jeffrey Kessler, undersecretary of commerce for industry and security, said Tuesday. “Today’s action shows BIS’ commitment to making this happen.”
According to the settlement, employees at Cadence’s Chinese subsidiary were responsible for transferring sensitive information related to supercomputer development to the National University of Defense Technology, Tianjin Phytium Information Technology and other sanctioned organizations. The illegal activities occurred between September 2015 and September 2020, during which Cadence admitted to committing 56 violations related to the exportation of technologies valued at $45.3 million.
Cadence and NUDT have been cooperating for years. After NUDT was added to the Entity List, BIS’ export control blacklist, Cadence began licensing its products and services to the Central South CAD Center, which acted as an intermediary between the two companies.
The case of illegal technology transfer coincides with the U.S. government’s increasing restrictions on Chinese access to critical technologies. In April, a new batch of 80 businesses was added to the Entity List. The list includes 11 Chinese companies involved in the development of supercomputers, advanced artificial intelligence and AI chips.