American company under investigation for transferring tech to Huawei

According to a Bloomberg report, Synopsys, a major EDA company, is under investigation by the U.S. Department of Commerce. The department claims that the company still transfers key technologies to Chinese companies that are on the U.S. ban list. According to the report, the investigation has not yet been made public. However, investigators are investigating the cooperation between Synopsys and Chinese affiliates. This is because the company provides Huawei HiSilicon with relevant technical support for chip design.

Huawei logo

The U.S. Department of Commerce regards Huawei and SMIC as national security threats. The country has since placed them on the Entity List. This prohibits U.S. companies from providing related technologies and products to the two companies unless they obtain permission from the United States.

This also shows the dilemma faced by companies under the Sino-US technology war. Since China is the world’s largest and fastest-growing market, in order to cater to investors, companies must explore cooperation with Chinese companies without breaking the restrictions of regulatory agencies.

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Synopsys denies any wrongdoing with Huawei

Synopsys said in December that it received a subpoena from the U.S. Bureau of Industry and Security (BIS) for allegedly “dealing with certain Chinese entities,”. However, the company did not say the sender of the subpoena at the time. At the time, Synopsys claims that it complies with all regulations and is working to respond to the investigation.

According to the Bureau of Industry and Security, it will not comment on ongoing investigations. However, it will investigate allegations of Export Administration Regulations violations. This includes attempts o transfer certain technology to or between parties on the Entity List. Shares of Synopsys fell 1.3% on Wednesday to close at $306.72, bringing their cumulative decline this year to 17%.

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BIS statement reads

“While the Department does not comment on the potential existence of investigations, BIS vigorously investigates allegations of violations of the Export Administration Regulations, including attempts to transfer controlled items or technologies to or among parties on the Entity List,”… “Any enforcement action resulting from an investigation is made public after that investigation has concluded.”

American companies are also on the losing end because they lose a lot of money. However, these companies have no choice but to comply with the government’s directives. Nevertheless, there are certain technologies that Huawei and other companies on the entity list can use. These companies are already developing their own technology to render the entity list useless. However, this will take many years of development.

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