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China’s Biggest Chip Maker Is Now on the Trump Administration’s Radar

Targeting China’s tech companies is now the norm.

Concentrating on China’s tech firms is now the norm.
Photograph: Thomas Peter-Pool (Getty Photos)

The Trump administration has one other Chinese language expertise firm on its radar: the Semiconductor Manufacturing Worldwide Company, the nation’s greatest chip maker. And as you all can think about if you happen to’ve been following the current information cycle, that’s not good for SMIC.

On Friday, the U.S. Division of Commerce knowledgeable American firms within the chip trade of latest restrictions on exports to SMIC, the Financial Times reported. Now, American firms should get hold of licenses from the federal government so as to promote merchandise, resembling software program and chip-making tools, to SMIC.

In a letter speaking the brand new restrictions to U.S. firms, the Commerce Division mentioned that it had taken motion as a result of exports to SMIC posed an “unacceptable threat” of probably getting used for navy functions.

In accordance with U.S. authorities sources quoted by the Occasions, the Pentagon made the proposal to limit SMIC as a result of it was apprehensive that the corporate was enabling the technological development of China’s navy.

In an announcement to Reuters, SMIC mentioned it had not obtained any official discover of the U.S. restrictions and that it doesn’t have ties to the Chinese language navy.

“SMIC reiterates that it manufactures semiconductors and offers companies solely for civilian and industrial end-users and end-uses,” it mentioned. “The Firm has no relationship with the Chinese language navy and doesn’t manufacture for any navy end-users or end-uses.”

However though SMIC faces new restrictions, it isn’t but on the entity list, which basically capabilities because the Commerce Division’s blacklist. Firms on the entity record are banned from utilizing U.S.-made tech of their units. This, per Reuters, makes it troublesome to get any export license authorised.

The Commerce Division’s Bureau of Trade and Safety, which controls the export of commodities and related technology that might compromise U.S. nationwide safety, declined to touch upon the SMIC restrictions in an announcement to Reuters. Nevertheless, it mentioned that it was “continuously monitoring and assessing any potential threats to U.S. nationwide safety and overseas coverage pursuits.”

The brand new restrictions are yet one more blow to SMIC, which had already been affected by U.S. sanctions on Huawei, its prime buyer. Not like SMIC, Huawei was added to the entity record in 2019.

Huawei chairman Guo Ping said this month that U.S. sanctions had introduced “nice challenges” to the corporate’s manufacturing and operations. The restrictions have hit Huawei’s smartphone division particularly exhausting, and the corporate mentioned it could cease manufacturing its Kirin chip, one in every of its most superior processors, starting on Sept. 15. The Kirin chips energy Huawei’s high-end telephones. The Occasions studies that the brand new restrictions can even have an effect on U.S. chip designer Qualcomm, which makes use of SMIC to fabricate a few of its chips.

The transfer is the most recent within the U.S.-China tech feud that has particularly intensified over the previous few months. In case you want a reminder, the Trump administration has tried to ban the video-sharing app TikTok and pressure its Chinese language proprietor, ByteDance, to promote the U.S. division to an American firm. It has additionally tried to ban the messaging app WeChat till a decide mentioned maintain your horses.

China hasn’t taken all of this sitting down. It has reportedly mentioned that it prefers TikTok to be shut down within the U.S. as an alternative of authorizing the compelled sale of the app to an American firm. The nation has additionally been working by itself model of a blacklist, or an “unreliable entity” record, that might bar sure overseas firms from importing, exporting or investing within the nation.

[The Financial Times]

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Jody Serrano