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China's leading chip design firm transfers control to state-owned enterprise following US sanctions

Major Chinese tech firm shifts to state control after US trade ban (Image source: SMIC)
Major Chinese tech firm shifts to state control after US trade ban (Image source: SMIC)
China's largest EDA software company Empyrean Technology transitions to state control under China Electronics Corporation following US trade restrictions. The move gives the state-owned enterprise majority board control and signals Beijing's strategy to shield key tech firms from foreign pressure through increased state ownership.

Empyrean Technology, China's largest electronic design automation software company, has handed control to state-owned China Electronics Corporation after being added to the US trade restriction. The Beijing-based company announced the leadership change in a corporate filing on Monday, causing its stock price to rise by nine percent to 134 yuan ($18.45) on the Shenzhen stock exchange.

The restructuring gives China Electronics Corporation, which owns 34 percent of Empyrean, six seats on the 11-member board after four directors from Empyrean resigned. A shareholder meeting later this month will finalize these changes.

Empyrean currently holds about five percent of China's EDA market, positioning it as the top domestic competitor to global leaders like Cadence, Synopsys, and Siemens EDA. In 2023, the company reported revenue of one billion yuan ($138 million), a 26.6 percent increase compared to the previous year. For the first nine months of 2024, it reported revenue of 744 million yuan ($102 million), a 16.3 percent increase from the same period last year.

On December 2, the US Department of Commerce added Empyrean and its subsidiaries to the Entity List. This move blocks transactions with US businesses and is part of a larger effort to target 140 Chinese entities and restrict access to 24 types of chipmaking tools.

Empyrean has described the impact of these sanctions as manageable, citing its reliance on local EDA software technologies. The company plans to leverage China Electronics Corporation's connections with government bodies and state-owned enterprises to maintain its operations.

This shift is part of a growing pattern in China's semiconductor industry, where state-owned enterprises are becoming more involved in private companies to counteract external pressures. A similar restructuring recently occurred at Jiangsu Changjiang Electronics Tech, a leading chip-packaging company now partly controlled by China Resources Group.

Source(s)

SCMP (in English) & TomsHardware (in English)

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> Expert Reviews and News on Laptops, Smartphones and Tech Innovations > News > News Archive > Newsarchive 2024 12 > China's leading chip design firm transfers control to state-owned enterprise following US sanctions
Nathan Ali, 2024-12-11 (Update: 2024-12-11)