Huawei is constantly being bombarded with sanctions amid the ongoing trade war. The latest set of sanctions put forward by the US government last month completely crippled the company’s chip subsidiary HiSilicon. According to the Financial Times, the US Commerce Department has imposed sanctions on China’s Semiconductor Manufacturing International Corporation (SMIC).
If you didn’t know, SMIC is the largest semiconductor company in China. Now, American companies will have to get special permission from the US government to work with SMIC. With no end in sight for the US-China trade war, none of these requests could be granted anytime soon.
US sanctions now prohibit American companies from working with China’s SMIC
This will leave the Chinese domestic semiconductor industry with its older technologies for the foreseeable future. The US government has put forward these sanctions citing the company’s ties with the Chinese military. With the Hongxin Semiconductor Manufacturing Company (HSMC) going bankrupt earlier this year, SMIC has become the Chinese semiconductor industry’s front runner.
The first 7nm chip from China, which HSMC promised to produce, will now come from SMIC. However, the latest sanctions will surely delay the company’s plans to produce 7nm chips in the near future. The next step for the US government will be adding the company to the entity list.
If added to the entity list, companies worldwide using American technology will also have to stop working with SMIC. Moreover, prior reports have suggested that the Chinese government has offered massive subsidies for semiconductor companies to invest in the R&D of advanced technologies.
The company denies having any connection with the Chinese military
Back in May this year, SMIC announced that it had secured a $2.2 billion investment from the Chinese government. In addition, Chinese companies have reportedly started researching options for 7nm production. Samsung and TSMC, the top two semiconductor companies globally, have already started developing technologies for 3nm production.
According to Reuters, the company said, “SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses. The company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses.”
Qualcomm, which is one of the top three clients for SMIC, has already been in touch with several Taiwanese foundries about moving production out of China. As per a recent report, SMIC is only responsible for producing chipsets using 28nm and 14nm processes.