The US government has sanctioned China’s largest chip maker, inflicting further damage on the country’s semiconductor industry after separating Huawei from its chip suppliers.
On Friday, the US Department of Commerce told companies that exports to Shanghai Manufacturing International Corporation (SMIC) represented an “unacceptable risk” of being diverted to “military end use,” according to a copy of the letter seen by the Financial. Times.
The move threatens to cut China’s largest chip maker from US software and equipment crucial to chip manufacturing. Companies now require licenses to export such products to SMIC.
On Saturday, the SMIC said it was continuing to engage with the US Department of Commerce. The company reiterated that it “has no relationship with the Chinese military and does not produce for end users or military end uses”
SMIC, a “national champion” that is crucial to the government’s hopes of achieving chip self-sufficiency, became the country’s largest initial public offering for a decade when it raised $ 7.6 billion in Shanghai in early September. this year.
The SMIC has already been hit by the tightening of US sanctions on Huawei. This meant that SMIC could no longer serve its largest customer. The chip maker had warned of the risk of a worsening of US sanctions in its IPO prospectus.
The sanctions will also hit Qualcomm, the US chip designer that uses SMIC to manufacture some of its chips. Analysts believe Qualcomm is SMIC’s second largest customer after Huawei.
On Saturday, SMIC said the company was not yet aware of the new sanctions and was looking into the situation.
The Beijing Ministry of Foreign Affairs has already declared its opposition to US sanctions against Chinese companies. Last weekend, China’s Commerce Ministry announced broad powers to curb the operations of foreign companies deemed “unreliable”.
Lawyers fear that Beijing’s “list of untrustworthy entities” could be used to punish foreign companies that sanction Chinese companies by placing such companies in a link between US and Chinese law.
The Commerce Department did not immediately respond to a request for comment.