In recent years, tensions between the United States and China have escalated, with electronic design automation (EDA) tools emerging as a new battleground in the technology competition between the two countries. Despite the Chinese Communist Party’s massive subsidies and relentless efforts, they have been unable to overcome the major obstacles in developing EDA tools.
ECAD, also known as EDA, which stands for Electronic Design Automation, is an indispensable software tool in chip design.
Different EDA tools are used at different stages of the manufacturing process. From the 22nm to 5nm process nodes, the mainstream architecture is FinFET. GAA, on the other hand, belongs to the next-generation chip technology and is the mainstream technology for processes below 2nm.
Although the EDA industry only accounts for 1.6% of the $600 billion global semiconductor industry, it plays a crucial role in the development of the supply chain for cutting-edge chips. The more advanced the chip manufacturing process, the higher the reliance on EDA tools.
The global EDA market is dominated by three U.S. companies: Synopsys, Cadence, and Siemens EDA. These three companies collectively produce almost all the software needed for designing, manufacturing, and testing the most complex chips.
The products supported by the three giants can achieve processes as advanced as 2nm. In contrast, Huada Jiutian, a Chinese company, only offers support for 5nm processes. Another Chinese company, Silecore, provides EDA products only for the 10nm process, while others support up to the 28nm process, showing a significant gap compared to international standards.
According to data from Shanghai consultancy ICWise Research, despite China’s efforts to produce cutting-edge domestic chips, the three U.S. companies still hold nearly 80% of the market share in China’s EDA market.
Li Guanhua, head of the Policy and Regional Studies Group at Taiwan’s Industrial Technology Research Institute, explained to Dajiyuan that EDA is a tool that assists IC designers in converting programming languages into physical chip layouts. These layouts are then packaged and handed over to foundries to manufacture masks, followed by the production process.
“With chip designs becoming increasingly sophisticated, such as Apple’s A17 Pro chip with nearly 19 billion transistors, the functionality and computing power of EDA tools must be extremely powerful,” Li stated.
In August 2022, the U.S. imposed an export ban on GAA process EDA tools to China, limiting the Chinese Communist Party’s ability to develop next-generation chip technology below 3nm.
Shortly after the U.S. sanctions in 2023, reports emerged in mainland China that Huada Jiutian had successfully supported the 3nm process node with its EDA software and had received recognition and orders from leading global chip foundries such as TSMC and Samsung. Domestic EDA company Golun Electronics also supports advanced process nodes such as 7nm/5nm/3nm.
Li Guanhua expressed skepticism about the reports, stating, “When mainland China mentions orders from both TSMC and Samsung, it raises doubts for me. I find it hard to believe it has reached international advanced levels.”
He analyzed that besides having excellent layout abilities, two other key factors for EDA providers are offering a rich IP library, as well as close collaboration with foundries. Li emphasized that these are essential for ensuring that the programming languages are transformed into effective silicon IP components that guarantee high yields and manufacturability.
“In terms of layout capabilities, rich IP content, and close collaboration with foundries, Huada Jiutian may only meet the prerequisites for 3nm layout capabilities. As for the latter two conditions, I remain skeptical,” Li summarized.
Brad Liao, a senior IC design manager in Taiwan, noted that successfully designing a chip at 3nm involves using EDA software to create a chip design that can be manufactured by foundries such as TSMC and Samsung, utilizing their 3nm technology. Only after testing the manufactured chips can the EDA software be deemed successful at 3nm.
“There has been no evidence of any IC design company in mainland China using Huada’s EDA to design and produce 3nm products. Therefore, Huada’s announcement is self-proclaimed and has not been verified through the sale of products,” he added.
Facing comprehensive chip export controls from the U.S., the Chinese Communist Party is striving for self-reliance. In its latest five-year economic plan released in 2021, the CCP prioritized chip design software as a key breakthrough in the semiconductor industry.
In 2023, a National EDA Innovation Center was established in Nanjing with the goal of taking on the critical task of breaking the U.S. monopoly on EDA software.
Simultaneously, the government is increasing subsidies to the domestic EDA industry and promoting the expansion of market share for domestic companies.
Starting in September 2018, the CCP’s “Mega Fund” project invested 24 million RMB in Huada Jiutian’s equity. Following Huawei’s inclusion on the U.S. Entity List in May 2019, the CCP’s Ministry of Finance and Taxation Administration announced a “two exemptions and three reductions” policy for IC design and software companies.
Local governments have also introduced subsidies for the EDA industry. Shenzhen announced in May 2019 a 20% capital expenditure subsidy for EDA companies, a 10% incentive on operating revenue, and a 30% subsidy for R&D costs. Shanghai offered a 30% subsidy for EDA enterprise investment in 2022, Hangzhou provided a 15% R&D subsidy in July 2022, and Beijing announced a subsidy of up to 50% for EDA tools procurement in February 2023.
In the first half of 2024, Huada Jiutian received a government subsidy of 77 million RMB.
Li Guanhua pointed out that subsidies are a strategic move for the CCP in the semiconductor industry. Even during economic downturns, the CCP continues to provide subsidies because mastering this critical technology is essential to them.
Brad Liao highlighted that designing a chip requires significant investments in manpower, money, and time. At present, the technical capabilities of mainland China’s EDA software still lag behind the top three international EDA vendors. Many IC design companies in mainland China currently use pirated versions of software from leading EDA companies globally, thus reducing the incentive to use local EDA tools. Once subsidies in mainland China are withdrawn, the prospects for domestic EDA vendors could become even bleaker.
Despite short-term government investments in Chinese EDA companies, they still face long-term structural challenges such as talent shortages, weak EDA ecosystem, immature product maturity, and lack of collaboration with advanced process foundries for development.
Li Guanhua noted that the biggest obstacle to developing EDA in China is the inability to secure cooperation with advanced process foundries like TSMC. Therefore, even if they manage to develop EDA solutions, doubts remain about whether they can achieve the expected performance and functionality.
He emphasized that while layout capabilities depend on developing computation, overcoming advanced process nodes requires cutting-edge technology and capital. Given the current U.S. restrictions, bridging the gap with the U.S. standard remains challenging, and Chinese EDA solutions may remain confined within China.
Brad Liao stated that current U.S. sanctions in EDA tools are limited to GNA transistor technology, involving 2-3nm technology, which is highly advanced. As mainland China’s IC design companies generally do not use 2-3nm technology for mass production, restrictions do not apply beyond this range.
“The technological barriers in EDA software are not as distant as lithography, nor are they insurmountable. Thus, I believe there won’t be a new round of U.S. sanctions on EDA tools,” Brad explained.
Li Guanhua emphasized that EDA functions as an assistance tool in chip realization. With the U.S. already imposing sanctions on advanced design tools, including talented individuals, they have already put in place comprehensive restrictions. Consequently, most possible channels are sealed off, making a new round of sanctions unlikely.