China‘s State Administration for Market Regulation (SAMR) has delayed its approval of the proposed $35 billion merger between American software giants Synopsys Inc. and Ansys Inc., following a recent escalation in U.S. export restrictions on critical technology, particularly chip design tools. The delay marks another flashpoint in the increasingly strained U.S.-China tech rivalry, as both governments continue to weaponize regulatory controls to assert their national interests.

A Deal Nearing Completion Suddenly Stalls

The merger, which would combine two of the largest players in semiconductor design and engineering simulation software, had already advanced to the final phase of China’s regulatory review, according to The Financial Times. Industry insiders expected the transaction to receive the green light by the end of June 2025, until Beijing unexpectedly hit pause.

Sources close to the matter revealed that the delay stemmed directly from Washington’s decision to tighten export rules related to sensitive chip technologies in late May. In particular, the U.S. government imposed restrictions that prohibit American firms—such as Synopsys—from selling semiconductor design software to Chinese entities without a license. These actions appear to have prompted a retaliatory slowdown in Beijing’s regulatory process.

Trade Truce Overshadowed by Escalating Controls

While U.S. and Chinese officials tentatively resumed trade negotiations in London this month, the progress made appears fragile. Earlier discussions reportedly collapsed over China’s imposition of export curbs on critical minerals, which are essential to global high-tech manufacturing, including semiconductors and batteries.

In response, the Trump administration swiftly moved to tighten export controls on a range of goods destined for China, including:

• Semiconductor design software

• Jet engines for Chinese-manufactured aircraft

• Other dual-use high-tech goods

These newly introduced restrictions have significantly complicated cross-border technology transactions, further undermining the likelihood of swift approvals for major deals like Synopsys-Ansys.

Merger Faces Regulatory Scrutiny on Multiple Fronts

Even before China’s delay, the Synopsys-Ansys deal had come under intense scrutiny from U.S. antitrust regulators. In May, the Federal Trade Commission (FTC) announced that the companies would be required to divest specific business units to mitigate concerns about reduced competition in the engineering software space.

According to Synopsys’ CEO, the company has already obtained regulatory clearance in all jurisdictions—except China. The SAMR’s review is now the only significant regulatory barrier standing in the way of closing the transaction.

Neither Synopsys, Ansys, nor Chinese regulators have issued official comments in response to the FT report, and Reuters was unable to independently verify the current status of the review.

Strategic Importance of the Merger

If finalized, the merger would represent one of the largest software consolidations in history, positioning Synopsys as a dominant force in both electronic design automation (EDA) and engineering simulation. This would further enhance the company’s capabilities in:

• Advanced chip design

• AI model training simulations

• Automotive systems and aerospace development

• 5G and quantum computing research

However, the merger’s scale and technological implications have raised alarms in both the U.S. and China, with each side wary of ceding leverage in the strategically vital semiconductor space.

Synopsys in the Crosshairs of Export Controls

As a leading supplier of chip design software, Synopsys sits at the heart of Washington’s push to limit Chinese technological advancement. The U.S. Department of Commerce, citing national security concerns, recently:

• Revoked licenses granted to several American firms, halting shipments to Chinese customers.

• Imposed new licensing requirements on any future software or components sold to Chinese companies.

These measures have had a chilling effect on the broader semiconductor ecosystem, as companies now face significant uncertainty regarding their ability to operate internationally—especially when Chinese markets are involved.

China’s Response Reflects Heightened Sensitivity

China’s decision to delay the merger approval may reflect more than just a tit-for-tat move. It highlights the increasing sensitivity in Beijing over foreign acquisitions, especially those involving cutting-edge technologies that could be restricted or weaponized amid geopolitical tensions.

Analysts suggest that China may be leveraging its regulatory power to:

• Pressure U.S. firms into opposing Washington’s export restrictions.

• Protect domestic industries by preventing excessive consolidation of foreign tech influence.

• Buy time to develop or expand Chinese alternatives in software segments dominated by U.S. companies.

Broader Implications for Global Tech M&A

The delayed approval underscores the growing difficulty in executing international mergers involving critical technologies, particularly when the parties are based in geopolitical rival nations. Key takeaways include:

• National security considerations now override traditional antitrust or market competition concerns.

• Regulatory unpredictability across jurisdictions can derail high-profile transactions at the last minute.

• Tech firms must recalibrate global strategies, anticipating heightened barriers to M&A activity involving China.

As U.S.-China tensions continue to rise, more companies may choose to limit exposure to either market or develop localized operations to sidestep regulatory bottlenecks.

Conclusion: A High-Stakes Deal in Jeopardy

The Synopsys-Ansys merger, once on track to reshape the global software landscape, now finds itself in limbo due to mounting geopolitical frictions. With China holding the final key to unlock the deal’s closure, and with the U.S. imposing stricter tech sanctions, the future of this $35 billion transaction remains uncertain.

While the parties await clarity from Chinese regulators, the episode serves as a stark reminder: in today’s world of techno-nationalism, business deals involving sensitive technologies are no longer governed solely by market logic—they are deeply enmeshed in the power politics of global rivalry.