I was thinking this mostly from the standpoint of viral nature of GPL-kind of FOSS licenses. E.g. somehow, somewhere someone manages to inject a GPL licensed IP block into a commercial CPU, after which, with my layman understanding, chip manufacturer now owes under the terms of GPL everyone who happens to have purchased one of those chips a full VHDL, Verilog etc. source code of the entire chip.

In software you can always replace a library that had incompatible license with another. Not sure how this would work with a chip.

As for attempts to modernize EDA industry, I welcome that in open arms. And if in the process we end up open sourcing a lot of current IP blocks (think of USB, HDMI, etc. designs) - all the better.

That is an absurdly wrong interpretation of both the GPL and how the courts exercise common sense.

How would you interpret the GPL in above situation?

Intuitively I'd thought something similar, but IANAL and could be completely wrong, of course :)

Different level of liability. When GPL missteps are discovered in software, the offender can usually just re-release the software without the GPL code and move on. In hardware…it's soldered into a bunch of devices all over the place. Consider Intel taking a $475 million hit for the FDIV bug (requiring a hardware replacement) vs the invisible bugfixing through microcode (i.e., software) they do now.

They would just need to pay a fee to the copyright owner for the violations, not replace all the existing hardware.

You don't skip validation just because you use open source.