On Friday, the US Commerce Department told American companies that they would be required to obtain a license to sell components or software to China’s Semiconductor Manufacturing International Corporation (SMIC) and its subsidiaries.
Some context: SMIC is China’s largest semiconductor manufacturer and is partially state-owned.
According to a Commerce Department statement, exports to SMIC posed an “unacceptable risk” of being diverted to military end-use applications.
The full extent of US export restrictions are not yet clear:
- SMIC has not been placed on the Commerce Department’s Entity List, which would vastly limit the company’s ability to source key technology and components
- he Commerce Department’s restrictions are reportedly based on a rule forbidding the export of certain items believed to be destined for military end-use.
- SMIC is one of the national champions at the forefront of Beijing’s drive to develop a strong indigenous chip making industry. US sanctions have the potential to badly curtail SMIC’s operations.
- “SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses.”
- “The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses
- Read: We'll wait to see how this plays out.