US-China tech war: Shanghai company at heart of Beijing’s semiconductor self-sufficiency drive red-flagged by Washington

A prominent company at the heart of China’s semiconductor self-sufficiency drive has been red-flagged by the US, signalling that rivalry between the world’s two-largest economies over strategic technology is intensifying.

Shanghai Microelectronics (SMEE), which is perhaps Beijing’s best current hope to produce machines that can manufacture advanced chips, was one of 33 Chinese entities added to an export watch list by the US Commerce Department on Monday, a move that could restrict the company’s imports of US technologies and products.

While the impact of being added to the list, which is compiled by the US Bureau of Industry and Security to question the bona fides of the companies involved, is not as significant as being added to the Commerce Department’s Entity List, it does mean that US exporters need to obtain licences to sell certain items to companies on the list.

This could prove costly for a company like SMEE, which is pushing hard to catch up in a strategic technology area.

China is currently unable to make advanced chips, such as those used in the latest smartphones, mainly because it has no access to the state-of-art lithography machines, a space currently dominated by Dutch company ASML Holding.