US chipmaker Cadence buys British firm Pulsic after Chinese sale is blocked

A US semiconductor company has acquired a British microchip-designing firm, months after the British government had blocked a Chinese acquisition of the business for national security reasons.

Cadence, a $55bn (£44bn) US-listed company, has taken over Bristol-headquartered Pulsic.

Electronic Design Automation (EDA) software is created by the US-based tech company, which employs 10,000 employees and has revenue of $3.5bn.

These computer programs are designed to create the billions and billions of tiny parts that make up a modern chip.

The US-China trade war has turned chip design software into a major battleground. The White House tried to block Beijing’s access the software needed to build the most advanced processors.

The US Department of Commerce placed export restrictions in October on some of its most advanced EDA software, which limits the work that companies like Cadence can perform with Chinese clients.

Since its founding in Bristol, Pulsic provides semiconductor design tools for customers all over the world.

LinkedIn says it has 45 employees and that its revenues will be £3.8m for the year 2022. According to its most recent accounts, it made a profit of £665,000 last year.

Kwasi Kwarteng – the former Business Secretary – intervened last summer to stop a Chinese investor from acquiring Pulsic.

The mysterious buyer, it was reported, was funded by Chinese state-backed investors.

Mr Kwarteng warned that the takeover “could facilitate the building of cutting edge integrated circuits”, which could have a “dual-use” and be used by the Chinese military.

The terms of the Cadence takeover have not been revealed. Cadence’s spokesman stated: “Cadence acquired Pulsic and we expect to share more information within the next two weeks.”

The news of the takeover follows Rishi Sunak’s Friday announcement that Britain had finally completed its national semiconductor strategy worth £1bn in ten years.

Last week, the Government confirmed that it had given its approval to set up an institute for semiconductor research as well as a “technology incubator” to assist cutting-edge chip startups.

The British technology industry has criticised the funding commitment.

Simon Thomas, Chief Executive of British graphene-chip start-up Paragraf said that the announcement was “quite flimsy”.

In the US President Joe Biden released tens billions of dollars to support the US semiconductor industry amid tensions between China and Taiwan, an international hub for chip manufacturing.

White House is courting British companies to establish themselves across the Atlantic. Industry concerns are that the UK struggles to scale its domestic industry.