(Reuters) -Cadence Design Systems raised its annual sales and profit forecast on Monday, after the U.S. lifted export curbs on chip design software to China earlier this month, allowing the company to resume sales to the key market
Shares of the company rose 7% in extended trading.
Removal of the restrictions, which were announced late in May, allowed Cadence to regain access to the Chinese market, which has become essential for electronic design automation providers.
China’s semiconductor industry has proliferated, benefiting from subsidies for local production against the backdrop of U.S. curbs.
The company expects annual revenue between $5.21 billion and $5.27 billion, up from its earlier forecast of sales between $5.15 billion and $5.23 billion and above estimates of $5.20 billion.
“Strength across all businesses” in the second quarter helped offset “the impact of the temporary restrictions on exports to China,” Chief Financial Officer John Wall said in a statement.
Cadence reported revenue of $1.28 billion for the June quarter, beating analysts’ average estimate of $1.25 billion, according to LSEG data.
Successive U.S. administrations have tried to curtail China’s access to cutting-edge U.S. technology, looking to stifle Beijing’s development of artificial intelligence and military tech.
Second-quarter sales to China represented about 9% of total revenue, down from the second quarter of last year, when Beijing accounted for 12% of total sales.
The Department of Justice also said on Monday that Cadence has agreed to plead guilty to resolve charges that the company unlawfully exported semiconductor design tools to a Chinese military university. Cadence will pay about $140 million in settlements.
At the same time, Cadence said it was expecting to benefit from about $140 million in reduced cash tax payments due to the immediate expensing of U.S. R&D expenditures under a tax regime signed into law by U.S. President Donald Trump earlier this month.
Cadence raised its 2025 adjusted per-share profit forecast to between $6.85 and $6.95, up from its earlier expectations of between $6.73 and $6.83.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Anil D’Silva)
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