U.S. Restricts Tech Exports to China’s SMIC

Article By : Alan Patterson

The U.S. is reported to have restricted exports to SMIC, citing the possibility the technology could support China's military...

The US government has restricted exports to Semiconductor Manufacturing International Corp. (SMIC) after concluding there is an unacceptable risk that equipment supplied to it could be used for military purposes, according to reports by Reuters and other news media.

Some suppliers of production equipment to SMIC now must apply for individual export licenses, according to a letter from the Commerce Department that Reuters said it had seen. The Commerce Department hadn’t published such an announcement on its website as of early Monday, September 28.


U.S. Export Controls Could Dampen Demand for Chip Gear

SMIC said in a statement that it has not received notification of the restriction from the US government. In the statement, the company said that it manufactures semiconductors and provides services solely for civilian and commercial uses. SMIC said it has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses.

A crackdown on SMIC would be the latest move by the US government in its competition with China to dominate the global technology industry. The administration of US President Donald Trump has taken measures to cut the supply of semiconductors to Huawei as part of a strategy to blunt the entry of the company into the 5G telecommunications business that’s seen as critical to technology leadership in the future.

The chip industry remains one of the few areas of the technology industry where China has yet to gain a significant foothold. Over the past decade, the nation has earmarked the equivalent of hundreds of billions of dollars to build a domestic semiconductor industry to offset imports, which still account for more than 80 percent of China’s chip market.

SMIC, China’s largest chipmaker, competes with other semiconductor foundries such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung of South Korea. SMIC, which has been ramping up its 14nm production technology, still lags years behind TSMC and Samsung, which are entering 5nm production this year.

Earlier this year, TSMC said it was optimistic that the U.S. government would relax its restrictions on chipmakers that use U.S. equipment and design tools to supply semiconductors to Huawei subsidiary HiSilicon, which has been blacklisted by the Trump administration.

Like TSMC, SMIC has been a chip supplier to Huawei, which was founded decades ago by members of China’s People’s Liberation Army.

TSMC has not taken any new orders from Huawei since May 15 this year, and it doesn’t plan to ship any silicon wafers made for the Chinese telecom giant after Sept. 15. As of May, Huawei accounted for about 15 percent of TSMC’s overall sales.

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