China’s SMIC could be barred by US soon as President weighs options

By Rahul Vaimal, Associate Editor
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After the high profile bans on Chinese electronic manufacturer Huawei and social media app TikTok, reports suggest that US President is now considering the prospects of adding top chipmaker SMIC to its trade blacklist. 

US Defense Department has been consulting several agencies in recent weeks to evaluate how adding the firm in the entity list would affect U.S. suppliers who are part of the Semiconductor Manufacturing International Corporation (SMIC)’s supply chain.

The US entity list now includes more than 275 firms based out of China including high profile entities like telecoms equipment giants Huawei Technologies and ZTE which were added the list over sanction violations along with surveillance camera makers Hikvision which found its place in the blacklist over suppression of China’s Uighur minority.

SMIC is the largest Chinese chip manufacturer but is second-tier to rival Taiwan Semiconductor Manufacturing Co Ltd, the industry’s market leader. It has sought to build out foundries for the manufacture of computer chips that can compete with TSMC.

As one of Huawei’s manufacturers, the firm is facing fresh restrictions in the US which require Huawei’s chip manufacturers to seek U.S. licenses before producing chips for the telecoms giant if they rely on U.S. chipmaking technology.

U.S. companies Lam Research, KLA Corp and Applied Materials, who all are engaged in providing end-to-end equipment solutions for the chipmaking process could be impacted by a potential entity listing.

SMIC’s relationship with the Chinese military is considered one of the primary factors leading towards its entry into the entity list. The United States had blacklisted 24 Chinese companies and targeted individuals last month for their involvement with construction and military actions in the South China Sea.

The US Defense Department has released two lists of Chinese companies in the past few months that it claims are owned or controlled by the People’s Liberation Army. The designation gives President Donald Trump the authority to place them on an even tougher blacklist but so far no action has been taken.