U.S. considers sanctioning SMIC, China’s largest semiconductor manufacturer

The U.S. administration under President Donald Trump is hell-bent on closing all avenues for Chinese OEM Huawei to run a sustainable business. The administration recently tightened its restrictions against Huawei even further and announced a new license requirement for all parties who wish to conduct business with the company. While some companies, like MediaTek, have already applied for the license to sell chips to Huawei, the company’s woes are far from over. As per a recent report from Reuters, the U.S. administration is now mulling over blacklisting China’s Semiconductor Manufacturing Internal Corporation (SMIC), which is currently the only chip maker safe from U.S. restrictions that prevent other chip makers from supplying chips to Huawei.

For the unaware, the U.S. administration amended an export rule earlier this year in May to block the shipment of chips to Huawei. The amendment essentially prevented most major chipmakers, like Taiwan’s TSMC, from supplying chips to Huawei. Shanghai-based SMIC was the only chip make unaffected by the restrictions, and it supplied Huawei with the new HiSilicon Kirin 710A chipset earlier this year. If the new restrictions go into effect, however, Huawei will be left with no chipmakers to produce its HiSilicon lineup of chips. As a result, the Huawei Mate 40 series may be the last smartphone range to feature a HiSilicon Kirin chipset. Although Huawei is exploring MediaTek’s high-end Dimensity chipsets for its devices, the supply will depend on whether the U.S. administration gives MediaTek the necessary license to start shipping to Huawei.

In a statement regarding the matter, SMIC told Reuters that it was “in complete shock” over the news. However, the company is open to communication with the U.S. government agencies to resolve any misunderstandings. According to a report from The Washington Post, the U.S. Department of Defense is currently working with other agencies to determine whether the “actions” of SMIC warrant adding the company to the government’s Entity List. Pentagon spokeswoman Sue Gough was quoted saying, “Such an action would ensure that all exports to SMIC would undergo a more comprehensive review.” The U.S. government is considering sanctions against SMIC based on a statement from a defense contractor in Reston, VA. The defense contractor claims that SMIC has a variety of ties to China’s defense sector, including an ongoing relationship with CETC — a state-owned developer of military electronics. So far, SMIC has released no statement regarding the matter.

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Source: Reuters, The Washington Post

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