What just happened? Another Chinese tech firm is feeling the consequences of US-China tensions. After taking aim at Huawei, TikTok owner ByteDance, and Tencent, among others, the US government has now placed sanctions on China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC).
The US Department of Commerce has sent a letter to US companies informing them that, as is the case with Huawei, they will now require licenses before exporting certain products to SMIC. The agency wrote that exports “may pose an unacceptable risk of diversion to a military end use in the People’s Republic of China.”
SMIC is the backbone of China’s plan to become technologically self-sufficient, thereby reducing its reliance on American firms for the hardware and software used in its public institutions. The country’s government hopes SMIC will play a major role in its “Made in China 2025” initiative, in which 70 percent of the semiconductors used by the country are homegrown by 2025.
Back in June, the SMIC delisted from the New York Stock exchange to make a public offering on Shanghai’s STAR Market, raising $7.6 billion. Having already been affected by the Huawei sanctions, SMIC warned in its IPO prospectus that the US government could tighten the screws even further.
SMIC uses US equipment and software in its manufacturing process. As noted by the Financial Times, the sanctions could end up hitting Qualcomm, which is thought to be SMIC’s second-largest company after Huawei. It also counts Broadcom among its clients.
SMIC says it has not been notified of the sanctions by the US government, adding it “has no relationship with the Chinese military, and does not manufacture for any military end users or end uses.”