SMIC: US ​​bans top Chinese chip maker from using US technology

The US government on Friday maintained harsh restrictions on the Semiconductor Manufacturing International Corporation (SMIC), while the Trump administration continues to put pressure on Chinese companies in recent weeks.

The Commerce Department has announced that dozens of Chinese companies, including SMIC, will be added to the so-called list of entities that are actually discontinuing them from US suppliers and technology.

“We will not allow US advanced technology to help build an increasingly belligerent adversary’s army,” said U.S. Secretary of Commerce Wilbur Ross in a statement, adding that the company “perfectly illustrates” the risks of China’s use. of US technology to modernize its military.

SMIC has previously said it has no ties to the Chinese military.

The move could create serious problems for SMIC, which, like many chip makers worldwide, relies on American software, machines and other equipment to design and manufacture semiconductors. For example, Chinese smartphone maker and 5G network provider Huawei, for example, saw a significant increase in sales since it was added to the list last year.

Name List of entities requires US exporters to apply for a sales license to SMIC. “Items uniquely needed to produce semiconductors at high-tech nodes – 10 nanometers or less – will be subject to a presumption of refusal to impede such a key technology to support China’s civilian-military fusion efforts.” said the US Department of Commerce.

SMIC is already dealing with another major headache. Chinese state media reported earlier this week that co-CEO Liang Mong Song is resigning. In an unusual turn of events, the company said in a statement on Wednesday that it was trying to confirm these reports, although it knew of “Liang’s desire to resign under certain conditions.”

The company did not immediately respond to a request for comment on Friday and did not file any new statements on the Shanghai Stock Exchange about Liang or US sanctions. While the US announcement came well after the end of normal working hours in Shanghai on Friday, Reuters reported earlier that the Commerce Department announcement was coming.

Asked about the Reuters report, a Chinese Foreign Ministry spokesman accused Washington on Friday of “using its state power to suppress Chinese companies.”

“We urge the United States to stop its unjust behavior in unreasonably suppressing foreign enterprises,” Wang Wenbin told reporters in a regular press briefing. “China will continue to take the necessary measures to protect the rights and legitimate interests of Chinese enterprises.”

Shares of SMIC sank about 5% in Hong Kong on Friday, with losses accelerating according to the Reuters report. The stock lost almost 10% this week, the worst since September, when media reports suggested that the US government was considering imposing restrictions on its business.

SMIC plays a critical role in fueling China’s technological ambitions. Much of China’s supply of chipsets comes from foreign companies, which supply everything from Chinese smartphones and computers to telecommunications equipment. Last year, the country imported $ 306 billion in chips, or 15 percent of the country’s total imports, according to government statistics.

The company, whose main shareholders are state-owned companies, said earlier this year that it wants to invest in technology and catch up with rivals. But SMIC is three to five years behind industry leaders Intel (INTC), Samsung and TSMC (TSM) and analysts say it has a long way to go to be a global competitor.

Liang’s loss could complicate matters, as the company’s recent technological advances have been “directly attributable” to him, Bernstein analysts wrote in a research note earlier this week.

Washington pressure is threatening to make it even harder for the company to catch up with foreign rivals.

The US Department of Defense earlier this month added the company to a list of companies the agency claims are owned or controlled by the Chinese military. This decision means that Americans are forbidden to invest in SMIC.