EDA technology company 
Cadence Design Systems Inc has agreed to plead guilty to resolve charges that Cadence committed criminal violations of export controls by selling EDA hardware, software, and semiconductor design intellectual property (IP) technology to 
National University of Defense Technology (NUDT), a university under the leadership of Central Military Commission. NUDT was added to Department of Commerce’s Entity List in Feb 2015 due to its use of US-origin components to produce supercomputers believed to support nuclear explosive simulation and military simulation activities in China.
Cadence will pay aggregate net criminal and civil penalties and forfeiture totaling more than $140 million.
From Feb 2015 to Apr 2021, Cadence and its indirectly owned and wholly controlled subsidiary in China, Cadence Design Systems Management (Shanghai) Co Ltd (Cadence China), engaged in a conspiracy to commit export control violations in connection with the provision of EDA tools that were subject to the Export Administration Regulations (EAR) to NUDT through Central South CAD Center (CSCC), an alias for NUDT, and another associated entity, Phytium Technology Co Ltd, without seeking or obtaining the requisite licenses from BIS. Specifically, Cadence, Cadence China, and their employees exported, reexported, and transferred in-country US-origin EDA tools to CSCC in China, despite having knowledge that CSCC was an alias for NUDT. As a result, Cadence and Cadence China exported and caused to be exported EDA tools at least 59 times through Sep 2020, when Cadence terminated Cadence China’s business relationship with CSCC due to CSCC’s association with NUDT.
Cadence admitted that Cadence China employees installed EDA hardware on NUDT’s Changsha, China, campus and that NUDT personnel downloaded EDA software and IP technology from Cadence’s download portals while Cadence and Cadence China, through its employees, had knowledge that NUDT had been added to the Entity List. On Feb 18, 2015, the same day that NUDT was added to the Entity List, Cadence’s export control officer emailed Cadence and Cadence China employees that NUDT had been added to the Entity List “meaning that export licenses will be required if sales are made.” Further, in Mar 2016, a Cadence China employee authored a presentation for a quarterly sales review meeting with her colleagues stating that as of Feb 18, 2015, Department of Commerce had “embargoed” four national supercomputer centers in China, including NUDT, due to US microprocessor chips being used in the “TianHe” supercomputing systems believed to be used for nuclear explosion simulation. Cadence also admitted that its employees who conducted work at CSCC’s location on NUDT’s campus knew about connections between CSCC and the PRC military.
Employees of Cadence China did not disclose to and/or concealed from other Cadence personnel, including Cadence’s export compliance personnel, that exports to CSCC were in fact intended for delivery to NUDT and/or military. For example, in May 2015, a few months after NUDT was added to the Entity List, Cadence’s then-head of sales in China emailed colleagues, cautioning them to refer to their customer as CSCC in English and NUDT only in Chinese characters, writing that “the subject [was] too sensitive.” Further, in Oct 2019, a Cadence China employee instructed another to recall and recirculate an updated version of a weekly email on Cadence China’s customers in China. The updated version of the weekly email removed a reference to PLA in relation to CSCC that was written in the original version. Employees of Cadence’s subsidiaries, including employees of Cadence China involved in sales to CSCC, also received sales commissions that incentivized achieving sales quotas as part of their compensation packages.
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justice.gov/opa/pr/cadence
Cadence Design Systems Inc has agreed to plead guilty to resolve charges that Cadence committed criminal violations of export controls by selling EDA hardware, software, and semiconductor design intellectual property (IP) technology to National University of Defense Technology (NUDT), a university under the leadership of Central Military Commission. NUDT was added to Department of Commerce’s Entity List in Feb 2015 due to its use of US-origin components to produce supercomputers believed to support nuclear explosive simulation and military simulation activities in China.
Cadence will pay aggregate net criminal and civil penalties and forfeiture totaling more than $140 million.
From Feb 2015 to Apr 2021, Cadence and its indirectly owned and wholly controlled subsidiary in China, Cadence Design Systems Management (Shanghai) Co Ltd (Cadence China), engaged in a conspiracy to commit export control violations in connection with the provision of EDA tools that were subject to the Export Administration Regulations (EAR) to NUDT through Central South CAD Center (CSCC), an alias for NUDT, and another associated entity, Phytium Technology Co Ltd, without seeking or obtaining the requisite licenses from BIS. Specifically, Cadence, Cadence China, and their employees exported, reexported, and transferred in-country US-origin EDA tools to CSCC in China, despite having knowledge that CSCC was an alias for NUDT. As a result, Cadence and Cadence China exported and caused to be exported EDA tools at least 59 times through Sep 2020, when Cadence terminated Cadence China’s business relationship with CSCC due to CSCC’s association with NUDT.
Cadence admitted that Cadence China employees installed EDA hardware on NUDT’s Changsha, China, campus and that NUDT personnel downloaded EDA software and IP technology from Cadence’s download portals while Cadence and Cadence China, through its employees, had knowledge that NUDT had been added to the Entity List. On Feb 18, 2015, the same day that NUDT was added to the Entity List, Cadence’s export control officer emailed Cadence and Cadence China employees that NUDT had been added to the Entity List “meaning that export licenses will be required if sales are made.” Further, in Mar 2016, a Cadence China employee authored a presentation for a quarterly sales review meeting with her colleagues stating that as of Feb 18, 2015, Department of Commerce had “embargoed” four national supercomputer centers in China, including NUDT, due to US microprocessor chips being used in the “TianHe” supercomputing systems believed to be used for nuclear explosion simulation. Cadence also admitted that its employees who conducted work at CSCC’s location on NUDT’s campus knew about connections between CSCC and the PRC military.
Employees of Cadence China did not disclose to and/or concealed from other Cadence personnel, including Cadence’s export compliance personnel, that exports to CSCC were in fact intended for delivery to NUDT and/or military. For example, in May 2015, a few months after NUDT was added to the Entity List, Cadence’s then-head of sales in China emailed colleagues, cautioning them to refer to their customer as CSCC in English and NUDT only in Chinese characters, writing that “the subject [was] too sensitive.” Further, in Oct 2019, a Cadence China employee instructed another to recall and recirculate an updated version of a weekly email on Cadence China’s customers in China. The updated version of the weekly email removed a reference to PLA in relation to CSCC that was written in the original version. Employees of Cadence’s subsidiaries, including employees of Cadence China involved in sales to CSCC, also received sales commissions that incentivized achieving sales quotas as part of their compensation packages.
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justice.gov/opa/pr/cadence