Cadence Design Systems has agreed to plead guilty and pay a $140.6 million fine to settle claims that the company violated US export laws by illegally selling its chip design technology to China’s National University of Defense Technology (NUDT).

The San-Jose, California-based company noted the charge in its quarterly results, published on Monday. The violations occurred between 2015 and 2021, when current Intel CEO Lip-Bu Tan was leading Cadence.

The criminal case against Cadence was brought by the US Department of Justice and the Department of Commerce’s Bureau of Industry and Security, which claimed that during the six-year period, Cadence China, a subsidiary of Cadence, shipped $45.3m worth of restricted products to the university and another associated entity without permission.

The university was added to the Department of Commerce’s entity list in February 2015 after it was found to be using US-made components to build supercomputers simulating nuclear explosions and military operations in China.

According to court documents, Cadence admitted that Cadence China employees installed EDA (Electronic Design Automation) hardware on NUDT’s campus in Changsha, China, with staff at the university then downloading EDA software and IP technology from Cadence download portals, despite employees of the two companies knowing NUDT had been added to the US entity list.

The documents further state that on the day NUDT was added to the list, Cadence’s export control officer informed Cadence and Cadence China employees of the move via email, explaining that “export licenses will be required if sales are made.”

Despite this, Cadence and Cadence China continued to violate US export restrictions until February 2021, when it received a subpoena from the US Commerce Department.

“Cadence has agreed to accept responsibility for unlawfully exporting sensitive semiconductor design tools to a restricted Chinese military university and has implemented a strong export compliance program to help prevent any further illegal transmission of American technology,” said assistant attorney general for national security, John A. Eisenberg. “American ingenuity is one of our nation’s most precious assets, and the National Security Division will vigorously enforce US export control laws to protect the technological advantage we enjoy because of that ingenuity.”

On the company’s earnings call after its quarterly results had been published, Cadence president and CEO, Anirudh Devgan, said the settlement represented a “mutually acceptable path forward for all parties and we believe are in the best interest of our customers, partners, and shareholders.”

He added: “I want to emphasize that Cadence is deeply committed to the highest standards of compliance, and we have significantly enhanced our compliance processes over the last few years and continue to implement improvement measures to proactively address evolving trade restrictions.”

For its second quarter, Cadence posted revenue of $1.3 billion, a 20 percent year-on-year increase.