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Cadence Design Systems to Pay $95 Million Penalty for Unauthorized Exports to Chinese Entities

Strategic Insights

— 1 min read

Cadence Design Systems, a leading provider of electronic design automation (EDA) solutions, has agreed to pay a $95 million administrative penalty to the U.S. Department of Commerce's Bureau of Industry and Security (BIS) for illegally exporting sensitive technology to Chinese entities tied to the development of military supercomputers. The company also signed a concurrent agreement with the U.S. Department of Justice that includes $45 million in forfeitures. This action underscores the severity of export control violations and the commitment of BIS to enforcing national security regulations.

Key Takeaways:

  • Cadence Design Systems agreed to pay a $95 million administrative penalty to BIS for unauthorized exports of EDA hardware and software to parties on the Entity List, an export controls blacklist.
  • The company admitted to 56 violations of the Export Administration Regulations (EAR) between September 2015 and September 2020, resulting in the export of $45,305,317.41 worth of sensitive technology.
  • Cadence employees knowingly transferred U.S. technology to entities that develop supercomputers in support of China's military modernization and nuclear weapons programs, including the National University of Defense Technology (NUDT) and Phytium Information Technology (Phytium).
  • The company used an alias, Central South CAD Center (CSCC), to sell EDA products to NUDT, which was placed on the Entity List in 2004.
  • Cadence maintained a sales relationship with NUDT for years after its placement on the Entity List, using the CSCC account and sharing personnel with the Chinese university.
  • The case was investigated by BIS's Office of Export Enforcement, San Jose Field Office, and the Federal Bureau of Investigation.

Statistics:

  • $95 million: administrative penalty paid by Cadence Design Systems to BIS for unauthorized exports.
  • $45 million: amount of forfeitures included in the concurrent agreement between Cadence and the U.S. Department of Justice.
  • 56: number of violations of the EAR admitted by Cadence between September 2015 and September 2020.
  • $45,305,317.41: value of sensitive technology exported by Cadence to CSCC with knowledge or reason to know that NUDT would be the end-user.
  • 2004: year National University of Defense Technology (NUDT) was placed on the Entity List.

Sources:

  • U.S. Department of Commerce, Bureau of Industry and Security: "Cadence Design Systems to Pay $95 Million Penalty to BIS for Unauthorized Exports to Chinese Entities Tied to Development of Military Supercomputers" (https://www.bis.gov/press-release/cadence-design-systems-pay-95-million-penalty-bis-unauthorized-exports-chinese-entities-tied-development)

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