Empyrean Technology, the biggest electronic design automation software firm in China, has transferred its control to the state-owned China Electronics Corporation due to its addition to the U.S. trade blacklist. This change in leadership was revealed in a corporate filing on Monday, which led to a 9% increase in its stock price, bringing it to 134 yuan ($18.45) on the Shenzhen stock market.
Board Restructuring
As a result of this restructuring, China Electronics Corporation, which holds a 34% stake in Empyrean, will have six seats on the board of directors, which consists of 11 members, following the resignation of four Empyrean directors. A shareholder meeting scheduled for later this month will finalize these adjustments.
Market Position
Currently, Empyrean holds around 5% of the EDA market in China, making it the leading domestic rival to international players like Cadence, Synopsys, and Siemens EDA. In 2023, the company reported revenues of 1 billion yuan ($138 million), marking a 26.6% growth from the year before. For the first three quarters of 2024, it reported revenues of 744 million yuan ($102 million), a 16.3% rise compared to the same timeframe last year.
U.S. Sanctions
On December 2, the U.S. Department of Commerce placed Empyrean and its subsidiaries on the Entity List, which prohibits transactions with U.S. companies. This decision is part of a broader strategy targeting 140 Chinese entities and limiting access to 24 categories of chipmaking equipment.
Empyrean has indicated that the effects of these sanctions are manageable, pointing out its dependence on local EDA software technologies. The firm intends to utilize China Electronics Corporation's links with governmental agencies and state-owned firms to sustain its operations.
Industry Trends
This transition reflects a growing trend within China's semiconductor sector, where state-owned enterprises are increasingly becoming involved in privately-held companies to mitigate external pressures. A similar shift has recently occurred at Jiangsu Changjiang Electronics Tech, a top chip-packaging firm that is now partially overseen by China Resources Group.
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