US Eases Tech Curbs on China: Is India’s Semiconductor Dream at Risk?
By RAJKUMAR VISHWAKARMA
13 July 2025 | New Delhi
Introduction: A Global Tech Shift with Local Implications
In a surprising but strategic move, the United States has eased restrictions on the export of chip-design software to China. This development marks a significant thaw in the ongoing tech tensions between the two superpowers. However, as China regains access to crucial Electronic Design Automation (EDA) tools, concerns are rising in India about whether this shift could derail its own ambitious semiconductor roadmap.
India, which has made notable progress over the past two years in building its semiconductor design and manufacturing capabilities, now finds itself facing renewed competition from a revitalised Chinese tech industry.
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1. US Lifts EDA Curbs in New Trade Understanding with China
In early July 2025, the US Commerce Department announced the removal of licensing restrictions previously placed on EDA software exports to Chinese firms. The restrictions, enforced in 2024 during heightened trade frictions, had effectively blocked Chinese access to advanced chip-design tools from major American firms like Synopsys, Cadence Design Systems, and Germany’s Siemens EDA (formerly Mentor Graphics).
This decision came as part of broader trade talks aimed at reducing mutual tariffs and addressing supply chain concerns. In return, China has reportedly agreed to ease some of its restrictions on rare earth exports and intellectual property barriers.
The EDA software in question may only represent around 2% of the global semiconductor industry’s revenue, but it plays a critical role. These tools are used for the intricate design, testing, and simulation of chips before they are manufactured. Without them, advanced chip development stalls.
2. Why India Should Pay Close Attention
China Reclaims Momentum in Semiconductor Design
By regaining access to advanced EDA software, Chinese companies now have the tools to catch up in the race toward AI chips, high-performance computing processors, and 3D packaging technologies. This could drastically increase the pace of innovation within China’s semiconductor sector.
Analysts believe that this move could potentially sideline India's design services industry, which had been gaining momentum due to China's earlier exclusion. The ease of business for Indian firms in this window might soon face significant pressure.
India’s Own Semiconductor Dream: Progress So Far
India has made commendable strides in positioning itself as a semiconductor hub. Through initiatives like the Semicon India Programme, Design-Linked Incentive (DLI) Scheme, and the Production Linked Incentive (PLI) for chips, the government has attracted global chipmakers and design companies.
Additionally, India is home to more than 20% of the world's chip design engineers, who primarily work on mature nodes—semiconductors ranging between 28nm and 90nm—that still cater to the majority of global chip demand.
However, despite this large talent base, India lacks the domestic capability to produce or control its own chip-design software tools. It relies on the same global EDA providers that were restricted from supplying China. Now that China is back in the game, India will need to move swiftly to maintain its edge.
3. Experts React: From Alarm to Strategic Readiness
Ruchir Dixit – Chair, India Electronics and Semiconductor Association (IESA)
"What this move shows is that software has become a frontline component of the semiconductor supply chain. We must treat EDA as a strategic capability."
He warned that China’s re-entry into the advanced chip-design arena could create a pricing and talent squeeze for Indian companies.
Biswajeet Mahapatra – Analyst, Forrester Research
"The US decision isn’t just about software—it enables China to rejoin the global race with full force. India must accelerate investments in indigenous chip design, packaging, and even localised EDA solutions."
Kunal Chaudhary – Partner, EY India
“This is India’s wake-up call. We must invest in building home-grown chip-design platforms and tool chains. It’s not enough to have the talent—we need the technological backbone too.”
Kathir Thandavarayan – Partner, Deloitte India
"China's chipmakers can now step up R&D in AI and edge computing. India must use this window to specialise in niche areas like chiplets, secure chips, and low-power SoCs."
4. India’s Position in the Global Chip Ecosystem
The Talent Advantage
India has long been a preferred destination for chip-design services, especially for global firms seeking low-cost, high-skill engineering resources. Companies like Intel, Qualcomm, and Broadcom have large design centres in Bengaluru and Hyderabad.
However, while design execution is strong, India’s ecosystem lacks ownership of IP (Intellectual Property) and tools. Without its own chip-design software platforms, India remains a service provider—not a global design leader.
Policy Support: A Good Start, But More Needed
The Indian government’s Design Linked Incentive (DLI) scheme has spurred interest in design startups, but most focus on SoC (System on Chip) development rather than software tooling. No major Indian firm currently competes in the EDA space.
To change this, policy experts suggest launching an “EDA Innovation Fund” within the broader Semicon India Programme, aimed specifically at nurturing local EDA and verification tool developers.
5. Rising Stakes: Competing with a Reinvigorated China
The Chinese Advantage Post-Lift
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State Funding: China’s chip startups are well-funded by state-backed VC funds and public-private partnerships.
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Speed: With restored access to EDA tools, firms can resume full-scale R&D operations immediately.
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IP Creation: China has been investing in domestic IP libraries, which it can now integrate with licensed EDA tools.
India’s Vulnerabilities
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Lack of EDA Players: India has no domestic equivalent to Synopsys or Cadence.
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Delayed Fab Projects: Large-scale fab announcements like Tata’s Dholera Fab are still in development.
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Skilling Gaps: While India produces chip engineers, advanced toolchain development expertise is lacking.
6. Strategic Response India Should Consider
i. Encourage EDA Startups
India must fund and incubate companies that can develop indigenous EDA solutions. While catching up with the West may take years, niche innovation in AI-optimised verification, layout automation, or chiplet orchestration could yield global interest.
ii. Build Centres of Excellence (CoEs)
These must be established in partnership with academia and global chip firms, focusing on toolchain training, advanced VLSI design, and next-gen architecture.
iii. Expand iCET Collaboration with the US
Under the India–US Initiative on Critical and Emerging Technology (iCET), India can jointly develop EDA tools, IP libraries, and verification ecosystems. India should seek technology transfer and co-investment in tool infrastructure.
iv. Design Incentives for IP Creation
Beyond design services, India must encourage IP creation in physical design, testing, and simulation layers. Tax breaks, grants, and royalty-sharing models could encourage this.
v. Address Talent Gaps
The government must scale up semiconductor-specific engineering programmes and integrate EDA tools into coursework across premier institutions like IITs, IIITs, and NITs.
7. Global Implications: A Three-Way Chip Race
USA: Still the Tech Leader
Despite lifting curbs, the US maintains controls on high-end chip exports. Its firms still lead in advanced logic and EDA tools. However, the political decision to ease restrictions suggests Washington is recalibrating its China strategy to manage economic interdependence.
China: Rebounding Fast
The rollback offers China a lifeline to restart its stalled chip-design momentum. If paired with long-term investment and talent retention, Beijing could pose a major threat in both design and fab innovation within the decade.
India: At a Crossroads
India is no longer a fringe player but not yet a power either. With talent, political will, and a growing startup base, it has a window of opportunity—but that window is narrowing.
8. The Road Ahead: Can India Secure Its Semiconductor Future?
The next 12 to 24 months will be critical. If India doubles down on domestic tooling, accelerates chip design centres, and establishes leadership in niche technologies, it can become a global alternative to China.
However, if it delays action, foreign investors and OEMs may revert to safer, faster-scaling Chinese options—particularly now that access to US EDA software is restored.
India’s semiconductor journey will not be decided in government offices or labs alone, but in its ability to innovate boldly, collaborate internationally, and execute swiftly.
Conclusion
The US easing of chip-design software curbs on China has reopened a critical lane for Beijing—but it has also redrawn the competitive landscape. For India, this is both a warning and an opportunity.
If India aspires to lead—not just participate—in the global chip economy, it must act now to safeguard and accelerate its semiconductor dream.