(Reuters) -Cadence Design Systems raised its annual revenue and profit forecasts on Monday, betting on resilient demand for its chip design software from semiconductor firms amid an AI boom, but tariff-led concerns around its China business cast a shadow.
Elevated demand for speedy and complex artificial intelligence processors has benefited the company, which provides software for designing chips and computing systems that help run that complex programs.
AI processor leader Nvidia and iPhone maker Apple are among Cadence’s customers.
Cadence now expects 2025 revenue in the range of $5.15 billion to $5.23 billion. This is up from its prior forecast of $5.14 billion to $5.22 billion. Analysts on average were expecting $5.19 billion, according to data compiled by LSEG
“We haven’t seen any change in customers’ behavior at this time, as they continue investing in R&D for their next-gen designs,” CEO Anirudh Devgan said in a statement.
The company raised its forecast for annual adjusted profit per share to a range of $6.73 to $6.83, up from its prior forecast of between $6.65 and $6.75.
CHINA MARKET TENSIONS
However, its shares fell more than 1% in extended trading, with the Sino-U.S. trade war hurting revenue from its key market.
Sales to China accounted for about 11% of total revenue in the first quarter, down from 12% in the year-ago period.
Annual China revenue would be flat at the midpoint of the forecast, a company executive said during a post-earnings call.
Executives, peppered with analysts’ questions over the impact from tariffs, tried to quell fears around any hit to sales.
“Software and services are not, you know, subject to tariffs,” a company executive said.
“We don’t believe that given our diversified supply chain, the tariffs will have effect on our hardware business as well…. We continue to monitor the situation.”
Cadence reported first-quarter revenue of $1.24 billion, in line with estimates, while adjusted profit of $1.57 per share beat estimates of $1.49.
Its forecast for second-quarter revenue and profit were also in line with Street expectations.
(Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila)
