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SMIC braces for impact

  • TRIVIUM China

  • 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.
But either way, it’s bad news for Beijing:
  • 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.
On Sunday, SMIC released a statement denying ties with the Chinese military:
  • “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
Meanwhile, when asked about the development on Monday, a spokesperson for the Ministry of Foreign Affairs gave a typically-worded response about China's plan to "adopt necessary countermeasures" and "safeguard the legitimate rights of Chinese enterprises." 
  • Read: We'll wait to see how this plays out.
Get smart: The need for Beijing to develop US-free supply chains for key tech components, including a robust and competitive domestic semiconductor industry, becomes clearer to Chinese leaders by the day.
 

read more

FT: China’s biggest chipmaker SMIC hit by US sanctions

NYT: U.S. Places Restrictions on China’s Leading Chip Maker

SMIC: CLARIFICATION ANNOUNCEMENT

Caixin: 商评|一旦美商务部对中芯国际下“禁令”,影响几何

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