Cadence Design Systems Inc. has agreed to plead guilty and pay over $140 million to settle criminal and civil charges related to unlawfully exporting semiconductor design tools to a Chinese military university. The company’s actions, which violated U.S. export control laws, were linked to the National University of Defense Technology (NUDT), a Chinese institution added to the U.S. Department of Commerce’s Entity List in 2015 due to its involvement in military and nuclear research.
The settlement includes nearly $118 million in criminal penalties and over $95 million in civil fines, coordinated between the U.S. Department of Justice (DOJ) and the Bureau of Industry and Security (BIS). The case highlights the increasing enforcement of U.S. export controls on sensitive technologies, particularly in the context of national security.
Between 2015 and 2021, Cadence, along with its subsidiary Cadence China, sold electronic design automation (EDA) tools and intellectual property to NUDT. These exports were made without the required licenses, despite the company’s knowledge of NUDT’s military affiliations. Cadence used front companies, including Central South CAD Center (CSCC), to bypass export restrictions.
According to the DOJ’s findings, Cadence’s employees were aware of NUDT’s designation on the Entity List but continued to provide EDA tools and technology to the institution. Internal communications, including warnings and concerns about the sensitive nature of the exports, were disregarded.
The criminal charges include conspiracy to violate U.S. export controls, with Cadence admitting that its employees knowingly engaged in the illegal export of U.S.-origin technology to a restricted military entity. The company also acknowledged its failure to voluntarily disclose the violations to authorities, though it later assisted in the investigation.
In response to the charges, Cadence has agreed to strengthen its internal compliance programs. The company has implemented new measures aimed at preventing future violations, including appointing an export compliance officer and revising its export controls.
The settlement was a result of a coordinated effort between DOJ and BIS. U.S. Attorney Craig H. Missakian stated, “Cadence’s failure to comply with export controls has serious implications for national security, particularly when dealing with military-linked entities.”
The case underscores the growing concerns about the security of U.S. technology in global markets, particularly as companies face pressure to navigate complex regulations in regions with sensitive military interests.
Cadence’s settlement is still subject to approval by a federal judge in California. The company’s efforts to remediate past conduct have been noted, but it also faces scrutiny for not fully cooperating with the investigation at earlier stages.
