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.
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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 alt=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.
The company said last week that the impact is “controllable”, as its home-grown technologies in EDA software ensure the independence and integrity of its operations.
The case shows how external geopolitical pressure is leading to unprecedented collaboration between China’s state-owned companies and private firms in the chip industry. CEC, once a strategic investor, will consolidate the financial statements of Empyrean Technology into its own and manage the EDA firm as a direct subsidiary.
