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Shares of Cadence Design Systems (CDNS) and Synopsys (SNPS), constituents in the MunAiMarkets Custom Design Software Stocks Portfolio, rose 4.9% and 5.0%, respectively on Thursday sparked by a major regulatory shift that unlocked a key growth market. Below are the details:

• Rollback of export curbs on EDA software sales to China:  U.S. lifted export restrictions on electronic design automation (EDA) chip design software and hardware to Chinese customers that were imposed on May 29th as part of a trade deal between the U.S. and China. For its part, China agreed to speed up export approvals for critical rare-earth minerals to the USA.
• Removal of roadblock to Synopsys' planned acquisition of Ansys:  Every regulatory approval has been received in every jurisdiction except China regarding the $35 billion acquisition of Ansys (ANSS), announced in January 2024, and Synopsys was in the final stages of securing clearance from China’s market regulator before the export restrictions were implemented. With the export restrictions withdrawn investors interpret this as a sign that the $35 billion merger with ANSS is now on track to close soon. 
• Alleviates negative impact on revenue for both companies: The export restrictions were only in effect for one-month so the impact on each companies annual revenues (11% of Synopsys’ revenue had been coming from China) won't be as negatively impacted.

What Is Electronic Design Automation (EDA) Software?  A collection of instruments that address different aspects of the chip design process such as simulation software that predicts circuit behavior; design solutions that help create the physical circuit elements; and verification systems that ensure the design is correct and manufacturable, all of which enable engineers, along with designers, to create advanced semiconductor chips and electronic components with enhanced accuracy and minimal expenditures of time. 

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