China’s top chip design tool maker cedes control to state-owned firm after US blacklisting

Empyrean Technology is handing control of its board to its largest shareholder, a state-owned enterprise, after Washington blacklisted the software maker

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China’s top maker of electronic design automation tools, Empyrean Technology, is handing control of its board over to its largest shareholder, a state-owned enterprise, showing how US sanctions are leading to unprecedented collaboration between the government and private chip firms. Photo: Shutterstock

Published: 7:00pm, 10 Dec 2024

China’s top developer of chip design systems has ceded control to its largest state-owned shareholder after the firm was put on a US trade blacklist, signalling growing government oversight of the semiconductor industry as Washington continues to tighten restrictions.

Beijing-based Empyrean Technology – China’s top alternative to US-based Cadence, Synopsys and Siemens EDA, which dominate the electronic design automation (EDA) tool market – said in a corporate filing on Monday that its board of directors granted China Electronics Corporation (CEC) full control of the company.

Its stock price surged 9 per cent to 134 yuan in Shenzhen on Tuesday.

Four Empyrean directors quit the board, paving the way for CEC, which indirectly holds a 34 per equity stake in the company, to take a total of six seats on the 11-seat board. A shareholder meeting is scheduled later this month to endorse the change.

Empyrean said the change would allow it to take advantage of CEC’s access to national ministries, local governments, and state-owned enterprises, according to a stock filing to the Shenzhen Stock Exchange on Monday. The change “will not adversely affect the day-to-day business activities of the company” or the “independence of personnel, business, financial independence and integrity of assets”, Empyrean said in the filing.

EDA software is vital for designing semiconductors, and US-based firms have a nearly monopoly on the most advanced tools. Photo: Shutterstock

The change, which doesn’t involve equity stake transactions, came a week after the US Department of Commerce added Empyrean and its subsidiaries to the so-called Entity List, along with other Chinese semiconductor firms, effectively barring it from doing business with American firms. CEC been on a separate list from the US Department of Defence over alleged ties to the Chinese military since 2021.