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China's Biggest Chipmaker Is Potentially The Next Target Of The US


10/05/2020


China's Biggest Chipmaker Is Potentially The Next Target Of The US
Another Chinese tech company is slated to become a target for the United States administration.
 
According to China's biggest chipmaker Semiconductor Manufacturing International Corporation (SMIC), restrictions imposed on it by the US could result in the company being cut off from key technologies which can have "material adverse effects" on its business, the company said in a warning issued to its investors.
 
Letters from the US Commerce Department about rules for working with the Chinese chipmaker have been sent to its American suppliers, SMIC said in a filing to the Hong Kong Stock Exchange on Sunday.
 
The Chinese tech firm said that "accessories and raw materials to SMIC will be subject to further restrictions" under the US export regulations and will also require suppliers to submit prior application for an export license for selling products to SMIC.
 
No further details were provided by SMIC. The sanctions on Huawei, the Chinese smartphone maker and 5G network supplier, by the US government have already prevented SMIC from supplying chips to it.  
According to analysts, the tech war between the US and China will reach new levels if the Trump administration takes more actions against the biggest semiconductor maker of China. In the field of chip making, China is still trying to catch up with the West and billions of dollars into the industry have been pumped into the industry in China with the aim of a Chinese company cropping up with the capability of designing and manufacturing leading edge chips.
 
However compared to the industry leaders Intel, Samsung and Taiwan's TSMC, SMIC remains three to five years behind. In this situation, if the company is prevented to use US technology it will lag behind further.
 
There were media reports last month that claimed that the US government is planning to increase pressure on SMIC. According to the reports, a letter to US companies was sent by the US Commerce Department with a warning that there was an "unacceptable risk" that the exports of American technology and good to SMIC could be used for military purposes in China.
 
The SMIC has however refuted such charges against it by the US and claimed that its semiconductors and chips are for civilian and commercial use only and the company has no links with the Chinese military.
 
The tensions between Beijing and Washington have caught other Chinese companies in its cross hairs. Restrictions have been put on, or threats to ban have been issued by US President Donald Trump and US officials on a number of high profile Chinese tech companies, which includes Huawei, the short video sharing app TikTok and Tencent's hugely popular messaging app WeChat.
 
US software, machinery and technology is critical for SMIC for designing and manufacturing of semiconductors just like many other global chipmakers. United States accounts for anywhere between 40 per cent 50 per cent of SMIC's equipment, according to an estimate of analysts at brokerage firm Jefferies.
 
(Source:www.cnbc.com)