Opinion | US-China trade war goes nuclear with Trump’s chip software ban

Sweeping ban, albeit hard to enforce, threatens to kneecap China’s semiconductor ambitions and endanger its national security

Reading Time:3 minutes

Published: 8:30pm, 4 Jun 2025

It is hardly a stretch to say that the Trump administration went nuclear last week in banning the sale of American semiconductor design software to China. The unprecedented move signals a tectonic shift in policy. The goal now is not simply to slow down China’s semiconductor ambitions; it is to halt them.

As with previous, less extreme restrictions, these ones are likely to backfire. They will further isolate the United States from the world’s largest semiconductor consumer market, strengthen Beijing’s resolve for hi-tech self-sufficiency and force President Xi Jinping to respond in kind.

Yet, even if events follow this now-familiar pattern, the nuclear analogy still holds. The stakes are so high because the latest US bans cut off China’s access to the most advanced electronic design automation (EDA) software.

While EDA is a small part of the broader chip ecosystem, it is arguably the most important part. It is essential for the design, simulation and verification of the most advanced chips, including those used in military defence and artificial intelligence.

Yet EDA software technology is the weakest link in China’s indigenous chip ecosystem. Chinese chip designers and manufacturers could be rendered helpless without access to it, as analysts estimate China is five to 10 years behind the most cutting-edge software.

Unlike earlier semiconductor bans that were relatively narrow in scope – targeting specific companies or chip types – the latest ban is sweeping and comprehensive. It restricts all Chinese companies from using US-created EDA technology. US and US-origin companies presently control over 70 per cent of the world market, so the new ban directly threatens China’s national security and technological ambitions.