US-China tech war: hopes rise for Washington to ease restrictions on SMIC amid chip shortage

Reports are surfacing among Chinese analysts and on social media suggesting that the US could ease sanctions on Semiconductor Manufacturing International Corporation (SMIC), the country’s most advanced chip maker, so that it can fast-track production of mature 14-nm and 28-nm chips to help ease the current global shortage.

SMIC, which is listed in Hong Kong, did not directly confirm if the reports were accurate, but it said in a statement on Tuesday that it would cooperate with its supply partners to ensure the “continuity in production and its capacity expansion”, adding that uncertainties still remain.

The Shanghai-based semiconductor foundry is building a 28-nm wafer production line in the Beijing Yizhuang economic development zone, with planned capacity for 100,000 12-inch wafers per month upon completion of the project’s first phase. Relaxed US restrictions on SMIC, if confirmed, would be an important sign of easing in US-China tech tensions under US President Joe Biden’s administration.

The speculation has emerged against the backdrop of chip shortages that have hurt the automobile industry, with US carmakers including Ford, General Motors and Tesla reportedly cutting back on production.

Unlike iPhones and other advanced electronics that require 7-nm or smaller chips, the microcontrollers and driver integrated circuits (ICs) typically used in cars are fabricated with mature technologies like 14-nm and 28-nm.

 Gu Wenjun, chief analyst at Shanghai-based semiconductor research firm ICwise, wrote in a social media post on Monday that some American equipment suppliers have obtained licenses to export certain types of equipment to SMIC, but he did not provide the source of his information.