Chip software stocks sink on report Trump ordered halt to China sales

Shares of chip design software makers Cadence and Synopsys tumbled in Wednesday trading after the Financial Times reported that the White House told them to stop selling to clients in China.

Cadence stock declined nearly 11%, while Synopsys was down about 10%.

The Bureau of Industry and Security under the U.S. Commerce Department sent letters to both companies and to Siemens, the newspaper said.

"We are aware of the reporting and speculation, but Synopsys has not received a notice from BIS," Synopsys CEO Sassine Ghazi said on a conference call with analysts on Wednesday.

He said the company expects a decline in full-year revenue from China.

Cadence and Siemens representatives did not immediately respond to CNBC's requests for comment.

The report follows the Trump administration's decision to get rid of the Biden-era chip "Diffusion Rule" that limited the export of artificial intelligence processors to China.

Nvidia celebrated the change, but it's not clear how forthcoming policy from the White House might affect Nvidia's business. Nvidia reports results after the bell on Wednesday.

Earlier this month, the Bureau of Industry and Security issued a warning about using Huawei Ascend AI chips, saying organizations that adopt them could be subject to enforcement action.

A spokesperson for China's Ministry of Commerce said the move undermined the two countries' preliminary trade agreement and demanded that the White House "correct its mistakes."

Read the Financial Times' full report here.