US threat to target China’s biggest chip maker SMIC risks undermining drive to boost domestic tech sector
- White House considers adding manufacturer to blacklist that would force US suppliers to apply for an export licence
- Impact on Chinese technology firms could hit everything from smartphones to missile guidance systems
The United States has threatened to target China’s top chip maker in a move that may slow the country’s efforts to develop critical technology at home.
The Trump administration is considering whether to add Semiconductor Manufacturing International Corporation (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.
While the Pentagon did not outline the reasons for the action, SMIC’s relationship to the Chinese military is under scrutiny, one current and two former US officials told Reuters.
Analysts said restricting SMIC’s access to US suppliers could disrupt China’s efforts to develop its own domestic integrated circuit (IC) and software industries, which would hit everything from smartphones to 5G base stations and missile guidance systems.
“A potential US trade restriction could disrupt SMIC’s supply chain, affecting its production in CMOS sensors, smartphone fingerprints products, and power management integrated circuits-related products,” said Eric Tseng, the chief executive of Taiwan-based semiconductor research firm Isaiah Capital & Research.
Established in 2000 and now the country’s largest chip maker, SMIC raised 46.3 billion yuan (US$6.8 billion) in its IPO in Shanghai in July – more than double its initial target – in what is expected to be China’s largest offering in 10 years.