WASHINGTON — The Trump administration has positioned new restrictions on exports to Semiconductor Manufacturing Worldwide Company, China’s most superior maker of laptop chips, a measure that would deepen the know-how battle between China and the USA.
In a letter on Friday, the Division of Commerce advised American corporations within the chip business that they need to first purchase a license to export know-how to SMIC and its subsidiaries. The division mentioned it was taking the motion after a assessment by which it decided that the Chinese language firm “might pose an unacceptable threat of diversion to a navy finish use within the Folks’s Republic of China.”
The measure, which may minimize SMIC off from the American software program and different know-how it must make its merchandise, comes because the Trump administration takes a harsher stance towards Chinese language know-how corporations that it has deemed a nationwide safety risk. The administration has clamped down on shipments to the Chinese language tech large Huawei, restricted exports to dozens of different Chinese language corporations by inserting them on an export blacklist this yr and moved to ban the Chinese language-owned social media companies WeChat and TikTok.
The Commerce Division and SMIC didn’t instantly reply to requests for remark. The letter was first reported by The Monetary Occasions.
The Pentagon, particularly, has expressed issues that SMIC, whose main shareholders embody a number of Chinese language state entities, has ties with the Chinese language navy. After Reuters reported this month that the Trump administration was contemplating blacklisting SMIC, the corporate issued a statement on WeChat saying that it produced chips solely for industrial and civilian customers.
“We’ve no relationship with the Chinese language navy,” the corporate mentioned.
Factories in China churn out an enormous share of the world’s cellphones, computer systems and web tools. However the silicon brains of that gear are sometimes shipped in from abroad.
Final yr, mainland China imported greater than $300 billion in laptop chips, greater than it spent on crude oil. The nation’s chief, Xi Jinping, has put huge assets towards making China extra self-reliant in semiconductors and different superior applied sciences.
However state assist has solely taken Chinese language chip makers to this point. Although SMIC is China’s most technologically superior chip maker, its manufacturing processes are years behind these of business leaders like Samsung and Taiwan Semiconductor Manufacturing Firm when it comes to the variety of transistors they will squeeze onto a chunk of silicon. Which means SMIC can’t make the intricate chips that finest assist the newest, most demanding purposes.
Even to provide its much less refined semiconductors, SMIC depends on software program and machines from American corporations. Analysts on the funding financial institution Jefferies estimate that as much as half of SMIC’s tools at the moment comes from U.S. suppliers. SMIC may wrestle to remain in enterprise if these companions can’t service and improve the corporate’s manufacturing tools.
SMIC’s enterprise has already been hit this yr by the Trump administration’s curbs on Huawei. In latest months, the Commerce Division has curtailed the Chinese tech giant’s ability to buy semiconductors anywhere in the world, including from SMIC. Huawei’s chip unit accounted for nearly one-fifth of SMIC’s sales last year, according to estimates by Credit Suisse analysts. Qualcomm, the American chip giant, is another large customer of SMIC’s.
Ana Swanson reported from Washington, and Raymond Zhong from Taipei, Taiwan.