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TAIPEI (Taiwan News) – The United States government announced on Friday (September 25) sanctions on China’s largest chipmaker, Semiconductor Manufacturing International Company (SMIC).
In a letter, the US Department of Commerce told US companies in the semiconductor industry that doing business with SMIC and its subsidiaries now requires a license, the Financial Times reported. The decision was made after it was determined that SMIC “may pose an unacceptable risk of diversion to a military end use in the People’s Republic of China,” reported the New York Times.
The New York Times reported that, according to a widely circulated investigative report within the Trump administration by US defense contractor SOS International, researchers from universities linked to the Chinese military appear to have made extensive use of SMIC technologies in their research. . The report also suggests that other SMIC clients are highly likely to have connections to the Chinese defense industry.
SMIC has already been hit by US sanctions on Huawei, which prohibit the company from providing chips to its largest customer, which accounts for a fifth of its revenue, according to the Financial Times.
The latest round of sanctions will also hit US chip designer Qualcomm, which uses SMIC to make some of its chips. According to analysts, Qualcomm is SMIC’s second largest customer after Huawei.
China imported more than $ 300 billion worth of computer chips last year, which is more than it spent on crude oil, the New York Times cited. While Beijing has focused on being self-sufficient when it comes to semiconductors, domestic companies like SMIC are years behind Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung.
Even the least advanced chips from SMIC rely heavily on American companies for software and machines. Analysts at investment bank Jeffries told the New York Times that up to 50 percent of SMIC’s teams currently come from US suppliers.
A SMIC spokeswoman said on Saturday (September 26) that the company had no relationship with the Chinese military and that its chips are only manufactured for civil and commercial purposes. SMIC added that it had not yet received any formal notification from the Commerce Department regarding sanctions.
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