Trump move boosts China, triggers BIG worry for Indian companies

In a move that could deal a serious blow to India's semiconductor ambitions, the Donald Trump administration has lifted restrictions on the export of Electronic Design Automation (EDA) software to China. This decision allows major US-based EDA companies like Cadence Design Systems, Siemens EDA, and Synopsys to resume their operations with Chinese firms.

Experts warn this could significantly affect India’s efforts to develop its own chip design ecosystem. The renewed access for China is expected to accelerate its progress in semiconductor R\&D and manufacturing, potentially putting India at a competitive disadvantage.

Ruchir Dixit, chairperson of the India Electronics & Semiconductor Association (IESA), said that while software wasn't initially seen as a supply chain issue, it’s now clear that EDA tools are central to enabling domestic manufacturing and employment. He added that companies considering India as a part of their "China Plus One" strategy might now delay or rethink their plans.

However, some in the industry believe the US decision won’t immediately affect India. Shankar Krishnamoorthy, chief product development officer at Synopsys, stated that the US is unlikely to impose similar curbs on India, given the strong ties between the two countries.

Still, the broader concern is that China’s advantage in having access to top-tier EDA software could fast-track its position in the global semiconductor industry. This includes advancements in critical sectors like artificial intelligence and high-performance computing.

Kunal Chaudhary, a partner at EY India, stressed the need for India to develop its own chip design software. He believes this is now a strategic necessity, and emphasized the importance of investing in R\&D, intellectual property, and skill development to strengthen India’s position in the semiconductor race.

Kathir Thandavarayan, a partner at Deloitte India, echoed similar concerns. He noted that with the US decision, Chinese firms will have the tools to enhance their chip design efforts, which will likely widen the technology gap. India, he said, plays a crucial role in global semiconductor design, accounting for around 20 percent of the workforce in this field. Most of the current activity is focused on mature nodes, and India now aims to build a complete semiconductor value chain, including design and manufacturing.

Despite these goals, Dixit pointed out that no EDA companies are part of the Indian government’s Design-Linked Incentive (DLI) scheme. He explained that current EDA leaders like Synopsys, Cadence, and Siemens often create barriers for smaller firms and startups, making it difficult for them to innovate or conduct complex research and development.

He added that many startups lack the manpower to address intricate technical challenges, which is a key reason why India still doesn’t have enough homegrown EDA firms offering comprehensive services. For India to catch up, the country will need to address these structural challenges, create more favorable policies, and invest in foundational technologies critical for semiconductor design and innovation.