Synopsys Inc. (NASDAQ:SNPS) shares plunged 21% in premarket trading Wednesday after the company reported fiscal third-quarter results below expectations and issued weak guidance, citing the impact of U.S. restrictions on chipmaking equipment sales to China.

For the quarter ended July 31, Synopsys posted adjusted earnings of $3.39 per share on revenue of $1.74 billion, missing forecasts of $3.80 and $1.77 billion.

Design automation revenue rose 23% year-over-year, including a $77 million contribution from Ansys, but the IP segment declined 8% due to export restrictions, weaker customer fees, and internal resource allocation issues.

Management said these challenges were likely to persist in the near term. The company faced new restrictions on China sales in late May, though the ban was lifted in early July.

For Q4, Synopsys guided adjusted earnings of $2.76 to $2.80 per share on revenue of $2.23 billion to $2.26 billion, well below expectations of $4.14 and $2.59 billion. Fiscal 2025 EPS was forecast at $12.76 to $12.80 on revenue of $7.03 billion to $7.06 billion, compared with estimates of $14.58 and $7.45 billion.