[ad_1]
The US government sanctioned China’s largest chip maker, inflicting further damage on the country’s semiconductor industry after separating Huawei from its chip suppliers.
On Friday, the US Department of Commerce told companies that exports to Semiconductor Manufacturing International Corporation (SMIC) posed an “unacceptable risk” of being diverted to “military end use,” according to a copy of the letter. seen by Financial Times.
The move threatens to isolate China’s largest chipmaker from crucial US chip-making software and equipment. Companies now require licenses to export such products to SMIC.
“It all depends on how the United States implements this. In the worst case, SMIC cuts out completely, which would seriously affect China’s ability to produce chips. This would be a turning point for US-China relations, “said Paul Triolo, head of technology policy analysis at the Eurasia Group consultancy.
The new sanctions on SMIC come after the Trump administration imposed sanctions on a wide range of Chinese tech companies and threatened to shut down social media apps TikTok and WeChat in the US.
SMIC, a “national champion” crucial to the government’s hopes of achieving chip self-sufficiency, became the country’s largest initial public offering for a decade when it raised $ 7.6 billion in Shanghai earlier this year.
SMIC has already been affected by the tightening of US sanctions on Huawei. This meant that SMIC could no longer serve its largest customer, which generates a fifth of its revenue. The chipmaker had warned of the risk of a worsening of US sanctions in its IPO prospectus.
The sanctions will also affect Qualcomm, the US chip designer that uses SMIC to make some of its chips. Analysts believe Qualcomm is SMIC’s second largest customer after Huawei.
On Saturday, SMIC said it was continuing to collaborate with the US Department of Commerce. The company reiterated that it “has no relationship with the Chinese military and does not manufacture for any end-user or military uses.”
SMIC added that it had not received any formal notification of the sanctions.
The Beijing Foreign Ministry has previously declared its opposition to US sanctions on Chinese companies. Last weekend, China’s Ministry of Commerce announced broad powers to curb the operations of foreign companies deemed “unreliable”, such as companies that “boycott or cut off supplies” to Chinese companies.
Lawyers are concerned that Beijing’s “list of unreliable entities” could be used to punish foreign companies that enforce US sanctions against Chinese companies, putting such companies in a squeeze between US and Chinese law.
According to US government sources, the Pentagon had made the proposal to blacklist SMIC because it was concerned that the company was allowing the technological advancement of China’s armed forces.
American pressure has prevented SMIC from buying the equipment necessary to make cutting-edge chips, like the ones Huawei needs, but can no longer buy, for its smartphones.
Since last year, the Dutch company ASML, the only manufacturer of the advanced machines needed to make high-end logic chips, has not been able to obtain a license to export to SMIC.
In April, the Commerce Department announced new rules aimed at preventing exports of US technologies that could support the development of military systems in countries Washington considers hostile. They dramatically expanded military end-user restrictions in existing export control regulations, and specifically sought to counter China’s efforts to support arms development with civilian companies through its “military-civil fusion” strategy.
The new regulations dramatically expanded the scope of products subject to military end-user licenses and broadened the definition of military use to include things that might not be components of the end product, such as items used to support development or production.
The US Department of Commerce said: “In general, the Department of Commerce’s Bureau of Industry and Security constantly monitors and assesses any potential threats to the national security and foreign policy interests of the US. We cannot comment on any specific matter, BIS, with its inter-institutional partners, will take the appropriate measures as justified ”.
