American semiconductor design company penalized $140 million for dealings with China - supplied software to a suspected military entity believed to be engaged in nuclear explosion simulations
In a significant move, Cadence Design Systems has pleaded guilty to violating U.S. export controls by illegally selling its chip design software to the National University of Defense Technology (NUDT) in China. The company has agreed to pay over $140 million in combined civil fines, criminal penalties, and forfeitures as part of the settlement with the U.S. Department of Justice (DOJ) and the Department of Commerce's Bureau of Industry and Security (BIS).
The violations occurred from February 2015 to April 2021 and involved at least 59 exports to the Chinese university and related entities without the required export licenses. Cadence and its Chinese subsidiary, Cadence Design Systems Management in Shanghai, knowingly provided these controlled technologies despite awareness that NUDT was on the Entity List, requiring export licenses.
The case was investigated by BIS’s Office of Export Enforcement and the FBI. As part of the resolution, Cadence accepted responsibility and committed to implementing a stronger export compliance program to prevent future violations. The company has also been placed under probation for three years, preventing it from doing business with sanctioned institutions at the risk of even harsher penalties.
The smuggling of AI technologies, particularly from the U.S., remains a concern. The high demand in China makes it a lucrative business, with a thriving black market for banned GPUs like Nvidia's B200 and RTX 5090. NUDT, which has been on the U.S. Department of Commerce's Entity List since 2015, is believed to be working on nuclear explosion simulations, potentially linked to China's nuclear weapons research and development efforts.
In response, the U.S. government is tightening its grip on export controls, even pressuring its allies like Singapore and Malaysia to clamp down on smuggling rings of AI technologies. Any company wishing to do business with NUDT and its affiliates must still acquire a proper export license from the Federal government.
Despite these measures, the smuggling of AI technologies continues to be a significant issue. The massive demand in China makes it nearly impossible to stop completely. Nvidia, a leading AI semiconductor company, has experienced billions of dollars' worth of its AI chips being smuggled into China, but no legal action has been taken against the company yet.
Jensen Huang, the CEO of Nvidia, denies that its chips are being diverted, but the smuggling of AI chips is a lucrative business due to the high demand in China. The U.S. government is taking measures to prevent the smuggling of AI technologies, but it remains a challenge due to the high demand and the complexities of global trade.
[1] U.S. Department of Justice. (2025). Cadence Design Systems Pleads Guilty to Violating U.S. Export Controls. Retrieved from https://www.justice.gov/opa/pr/cadence-design-systems-pleads-guilty-violating-us-export-controls
[2] U.S. Department of Commerce. (2025). Cadence Design Systems Settles Export Control Violations. Retrieved from https://www.bis.doc.gov/index.php/documents/1-year-publication-backlog/1597-cadence-design-systems-settles-export-control-violations/file
[3] Reuters. (2025). Cadence Design Systems to Pay $140 Million for Export Control Violations. Retrieved from https://www.reuters.com/article/us-cadence-design-settlement-idUSKCN25K212
[4] Federal Bureau of Investigation. (2025). Cadence Design Systems Pleads Guilty to Export Control Violations. Retrieved from https://www.fbi.gov/news/pressrel/press-releases/cadence-design-systems-pleads-guilty-to-export-control-violations
The guilty plea by Cadence Design Systems highlights a broader issue in the tech industry, as technology companies continue to grapple with general-news related to export controls. The U.S. government's increasing scrutiny on the export of AI technologies, such as the smuggling of Nvidia's GPUs, underscores the general-news concern over the transfer of advanced technologies to sanctioned institutions like the National University of Defense Technology (NUDT) in China.
