The US Department of Justice (DOJ) announced that Cadence Design Systems has agreed to plead guilty and pay more than $140m in penalties for exporting semiconductor design tools to a Chinese military university.

The company based in San Jose, California, will pay nearly $118m in criminal penalties. This follows its admission of violating export controls by selling electronic design automation (EDA) technology to the National University of Defense Technology (NUDT), which is associated with China’s Central Military Commission.

National Security Assistant Attorney General John Eisenberg said: “Cadence has agreed to accept responsibility for unlawfully exporting sensitive semiconductor design tools to a restricted Chinese military university and has implemented a strong export compliance programme to help prevent any further illegal transmission of American technology.

“American ingenuity is one of our Nation’s most precious assets, and the National Security Division will vigorously enforce US export control laws to protect the technological advantage we enjoy because of that ingenuity.”

NUDT, added to the US Department of Commerce’s Entity List in 2015, is believed to have used US-origin components to develop supercomputers for military purposes.

From February 2015 to April 2021, Cadence and its subsidiary in China exported EDA tools without obtaining necessary licences, despite knowing NUDT’s status on the Entity List.

Cadence’s court documents reveal employees facilitated exports to NUDT through Central South CAD Center (CSCC), an alias for the Chinese university. The company continued transactions until September 2020 when it ended its relationship with CSCC due to its ties with NUDT.

The US Bureau of Industry and Security (BIS) also announced a parallel civil enforcement settlement, with Cadence agreeing to pay over $95m in civil penalties.

Further investigation revealed that employees concealed exports’ true destination from Cadence’s compliance personnel, said the DOJ. The employees also used aliases in communications to avoid detection.

Additionally, Cadence transferred contracts from CSCC to Phytium Technology, another entity linked with NUDT. This was before placing Phytium on export hold in March 2021.

Following the DOJ and BIS crediting Cadence’s payments under the coordinated agreements, the company will pay a total of over $140m in combined net criminal and civil penalties and forfeiture.

The resolution awaits approval from a federal judge in the Northern District of California. The Federal Bureau of Investigation and BIS’s Office of Export Enforcement conducted investigations into the case.