Cadence must pay $140 million for selling chip design tech to Chinese military university

SAN JOSE, Calif. (CN) — Cadence Design Systems, a multinational tech company, agreed to pay $140.6 million to the U.S. government on Monday to settle claims that the company illegally sold semiconductor design technology to a Chinese military university through a front company between 2015 and 2021, in violation of federal export laws.

The tech company admitted wrongdoing in a plea agreement released on Monday.

“Cadence is pleased to have reached these settlements and believes they are in the best interests of Cadence, its customers and its stockholders,” the company said in filings with the Securities and Exchange Commission.

In the agreement, Cadence admitted to selling products and services valued at $45.3 million to a buyer affiliated with the National University of Defense Technology, a military university in the People’s Republic of China under government leadership, without the U.S. government’s approval.

The Chinese university was blacklisted by the U.S Department of Commerce in 2015 after it suspected the school of using its supercomputer, which used U.S. microprocessor chips, to simulate nuclear explosions and military activities.

Specifically, Cadence said employees of its Chinese branch sold and installed hardware on the university’s campus and that university personnel downloaded software and other IP technology from the company’s download portals, despite knowing that the university was on the Commerce Department’s Entity List.

An FBI official called Cadence’s conduct “unacceptable.”

“Protecting the U.S. semiconductor industry is critical to our national defense,” Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence Division said in a statement, adding that the FBI will “stop at nothing” to defend the U.S. from the Chinese Communist Party.

In addition to the steep fines, Cadence also agreed to a three-year probationary term with requirements for additional export compliance programs and policies, including ongoing reporting and agreements to cooperate in any future investigations. The company will also submit to annual audits by the federal government.

A Justice Department official called the settlement a “positive step” toward demonstrating “corporate responsibility.”

“Export controls safeguard America’s advanced technological know-how from falling into the wrong hands, which is particularly important in the Silicon Valley as the epicenter of groundbreaking innovation,” U.S. Attorney Craig H. Missakian of the Northern District of California said in a statement.

A spokesperson for Cadence declined to comment.

Cadence is a San Jose-based tech company that creates tools to develop electronic chips and semiconductors used in personal computers, medical systems, cloud and data center equipment, automotive systems, supercomputers and other devices. In recent years, the company has branched out into artificial intelligence-based products as well.

Cadence first received subpoenas related to the National University of Defense Technology from the U.S. Department of Commerce in February 2021 and from the Justice Department in November 2023. The company stressed it has been “deeply committed” to compliance with the federal agencies’ investigations since then.

In December 2024, Cadence said it began discussions with the agencies regarding their preliminary findings and a potential resolution for the Justice Department’s criminal complaint and the Commerce Department’s civil enforcement action. The company finalized its settlements with each agency on July 27, 2025, in which it agreed to plead guilty to one count of conspiracy to commit export control violations and pay a total of $140 million.

The plea agreement has yet to be approved by a federal judge.

This case was filed in the Northern District of California.