Explainer | ASML, Huawei and Qualcomm may be caught in the crossfire as SMIC runs risk of US blacklist in escalating tech war

The US makes up the biggest geography of origin for SMIC’s suppliers, with US-listed companies making up 10 of the top 30 vendors

China was the country of origin for 13 of SMIC’s 38 biggest customers, or 34 per cent of the total, as of August 14

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Trainees learning how to build and operate an EUV machine at the training centre at ASML Holding in Tainan, Taiwan on August 20, 2020. Photo: Reuter

Published: 4:08pm, 6 Sep 2020Updated: 4:12am, 3 Feb 2021

The latest threat by the Trump administration to blacklist Semiconductor Manufacturing Industry Corporation (SMIC), China’s largest producer of silicon chips, will affect scores of customers and suppliers across the globe, as they get caught in the crossfire of a US-China technology war, fuelled by the worst bilateral relations in decades.

The Trump administration is considering whether to add SMIC to a trade blacklist, which would force US suppliers to seek a difficult-to-obtain licence before shipping to the company, a Pentagon spokeswoman told Reuters on Friday.

Based in Shanghai, SMIC raised 53.27 billion yuan (US$7.8 billion) in a secondary listing on the city’s Star Market in July, 14 months after withdrawing its listing from the New York Stock Exchange. That was China’s biggest initial public offering in a decade.

Here’s a look at SMIC’s relationship with its publicly traded suppliers and customers, based on financial data from exchange filings compiled by Bloomberg analytics.

Who is SMIC’s biggest supplier?

ASML Holding, the world’s largest maker of photolithography machines vital in the production of integrated circuits, is the biggest supplier to SMIC. The company, based in Veldhoven of the Netherlands, accounted for 11 per cent of SMIC’s capital expenditure as of April 2, according to Bloomberg’s data. SMIC made up 0.12 per cent of the Dutch company’s revenue in the same period.

Which countries do most of SMIC’s suppliers come from?

The US makes up the biggest geography of origin for SMIC’s suppliers, with US-listed companies making up 10 of the top 30 vendors. The biggest American supplier is Lam Research of Fremont, California, a producer of plasma etching machines used in the production of silicon chips. Lam Research contributed to 8.5 per cent of SMIC’s expenditure as of May 4, earning 1.1 per cent of its revenue from the Chinese company.

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