26 september 2020
17:25
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The US government is imposing strict restrictions on technology exports to SMIC, China’s largest chip maker.
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US companies are now required to apply for licenses to export certain technology to Semiconductor Manufacturing International Corp (SMIC). This threatens the largest chip manufacturer in China to run out of crucial American software and technology. Previously, the Chinese tech giant Huawei was already hit by a similar ban.
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According to the US government, there is an “unacceptable risk” that the technology provided could be used for military purposes. This is evident from a letter from the US Department of Commerce. SMIC denies having any ties to the Chinese military.
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The export ban is a sacrifice for China’s ambitious plans to build its own chip sector and no longer be dependent on foreign chips. SMIC, which is supported by several Chinese state-owned companies, plays a central role in this. The company had a spectacular stock market debut in Shanghai earlier this year. It raised $ 7.6 billion, accounting for the largest Chinese IPO in a decade.
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Tipping point
Observers are talking about a possible “tipping point” in US-China relations. It depends on how the US implements this. At worst, SMIC would be cut off completely, which would seriously blow China’s chip manufacturing capabilities, ”Paul Triolo of Eurasia Group consultant told Financial Times.
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Meanwhile, the Chinese government is not idle. Last weekend, the Department of Commerce came up with new powers to cut the wings of ‘untrustworthy’ foreign companies. Specifically, this concerns companies that still refuse to supply to China. American companies that want to comply with the export ban are therefore caught between two fires.
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