The Biden administration escalates pressure on China’s chipmaker
U.S. Tightens Restrictions on China’s Top Chipmaker
The Biden administration has intensified efforts to limit U.S. technology sales to China’s top sanctioned chipmaker, SMIC, by cutting off its most advanced factory from more American imports after it produced a sophisticated chip for Huawei’s Mate 60 Pro phone, sources familiar with the matter revealed.
Commerce Department’s Actions against SMIC
The Commerce Department sent letters last year to U.S. suppliers to SMIC, suspending permission to sell to its most advanced plant, known as SMIC South, halting millions of dollars worth of shipments of chipmaking materials and parts from at least one supplier, Entegris, according to sources familiar with the matter.
Concerns Over Export Regulations
Entegris, a Massachusetts-based company, said it made the shipments in accordance with a valid export license and has been monitoring and complying with the rapidly evolving regulatory requirements for international trade affecting the chip industry.
China’s Response
China’s embassy in Washington criticized the move as “out-and-out economic bullying,” urging the U.S. to stop “overstretching the concept of national security and abusing state power to suppress Chinese companies.”
Pressure from China Hawks
The license suspensions by the Commerce Department show the Biden administration’s actions against SMIC amid rising pressure from Republican China hawks to stem the flow of U.S. technology to the company and degrade its ability to make sophisticated chips.
U.S. Restrictions on SMIC and Huawei
The U.S. has gradually restricted SMIC and Huawei’s access to advanced U.S. technology, with the Biden administration unveiling new rules in October 2022, effectively banning U.S. suppliers from sending semiconductor tools and materials to advanced Chinese-run chipmaking factories.
Impact on Entegris and SMIC South
Entegris shipped chipmaking parts and materials to SMIC South between October 2022 and the end of last year, accounting for 16% of its net sales in China. SMIC South could potentially face interruptions in production if its U.S. supply chain is suddenly cut off, experts say.
Challenges for SMIC South
Experts assert that SMIC South is the only SMIC factory with the capability of making the Mate 60’s 7 nanometer chip. Analysis firm Techsights also revealed that SMIC built the advanced processor to power it, highlighting the challenges the company may face in the wake of the U.S. restrictions.
Concerns Over Access to U.S. Chip Design Software
Reuters previously reported how a chip designer part-owned by SMIC still enjoys access to state-of-the art U.S. chip design software, raising concerns about the potential impact of the U.S. restrictions on the company’s operations.
