Last week, the Justice Department announced that Cadence Design Systems Inc. (Cadence), a global electronic design automation (EDA) technology company based in San Jose, California, agreed to plead guilty to a conspiracy to violate export control laws by selling EDA hardware, software, and semiconductor design intellectual property (IP) technology to the National University of Defense Technology (NUDT).

NUDT, which is a university in the People’s Republic of China (PRC) is controlled and run by the PRC’s Central Military Commission, was added to the U.S. Department of Commerce’s Entity List in February 2015 due to its use of U.S.-origin components to produce supercomputers believed to support nuclear explosive simulation and military simulation activities in the PRC.

Under the plea agreement with DOJ, Cadence agreed to pay a criminal fine of nearly $118 million.

As part of the settlement, Cadence resolved civil charges with the U.S. Department of Commerce, Bureau of Industry and Security (BIS) and agreed to pay over $95 million in civil penalties. DOJ and BIS agreed with each other to credit a portion of the fines and penalties paid.  In sum, Cadence agreed to pay aggregate net criminal and civil penalties and forfeiture totaling more than $140 million.

DOJ and BIS cited the fact that Cadence exported important semiconductor design technology to a restricted PRC military university using a front company.  Reflecting the important national security concerns, DOJ and BIS are committed to aggressive enforcement to protect the U.S. semiconductor industry and the national defense.