The US has instituted a ban on the Chinese chipmaker, Semiconductor Manufacturing International Corporation (SMIC), adding the company to its already long entity list. Having the ban in place means that the firm is now no longer allowed to do business with US suppliers, and vice versa.
According to the US Commerce Department, it immediately put the ban in place after it received news that SMIC technology could be used for Chinese military purposes. In conjunction, a defence contractor based in the US also claimed that university researchers with links to the military were designing projects based on SMIC technology.
The move also comes as a surprise to SMIC, to say the least, saying that it received no prior notice and repeatedly denies having any links to the Chinese military. Stating that its technology is being used “solely for civilian and commercial end-users and uses”.
This isn’t SMIC’s first time to be cast under the spotlight. Back in May, it was reported that China’s ruling government, the Chinese Communist Party, was putting up US$2.2 billion (~RM9.18 billion) of its funds into the local chipmaker. As a response to the US’ extended sanctions on Huawei. China’s decision to invest big in SMIC is also a message to the Chinese semiconductor brand; it has some pretty big shoes to fill, especially in the absence and void left behind by its Taiwanese rival, TSMC.
Like all companies in the US’ entity list, both companies from the US and SMIC will be required to apply for permission in order to deal with each other in the future, but even that’s no guarantee that either party will receive the help. On top of that, it’s unclear if and how the Chinese government will retaliate to the new ban.