Cadence forecasts fourth-quarter profit below estimates as US-China trade tensions weigh

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(Reuters) -Cadence Design Systems forecast fourth-quarter profit just shy of market estimates on Monday, as Sino-U.S. trade tensions threaten to hurt demand for its chip design software from key market China.

Uncertainty around China-U.S. trade relations has cast doubt over Cadences’ business in one of the largest markets for semiconductors, overshadowing the benefits of artificial intelligence-linked demand from American tech firms.

Cadence forecast adjusted profit of between $1.88 per share and $1.94 per share for the fourth quarter. The midpoint of this range of $1.91 per share came in below analysts’ estimates of $1.92 per share, according to data compiled by LSEG.

That sent its shares down nearly 2% in extended trading.

While the U.S. lifted brief export curbs on chip design software to China in July, tensions between the two biggest economies in the world have persisted with Beijing prompting domestic businesses to reduce reliance on American tech.

Still, global firms elsewhere that either design or manufacture AI chips, such as Nvidia and TSMC, rely heavily on software from Cadence, boosting overall sales.

The company expects fourth-quarter revenue of between $1.41 billion and $1.44 billion, compared with analysts’ average estimate of $1.41 billion, according to data compiled by LSEG.

It also raised its 2025 revenue forecast to a range of $5.26 billion to $5.29 billion, up from its earlier expectations of $5.21 billion to $5.27 billion.

Cadence reported third-quarter revenue of $1.34 billion, beating estimates of $1.32 billion.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Anil D’Silva)