Sanctions Slam Chinese Tech Manufacturers

Issue 38

09.28.20 - New sanctions have reportedly been imposed on the Chinese chip manufacturer SMIC. The company is China’s largest chip manufacturer and the move threatens Beijing’s drive to become more dominant in an increasingly critical section of the technology industry.

U.S. suppliers for the chip manufacturer will reportedly need to apply for an export license under the new sanctions, according to a letter sent by the Department of Commerce to a list of companies in the country that work with SMIC. The Department of Commerce stated that technology sold to SMIC could be diverted to military use, when explaining the reason for new sanctions.

China has been attempting to boost its semiconductor industry, and SMIC is seen as a critical part of this effort. Many experts have stated that sanctions on SMIC could hold back China’s efforts in the semiconductor industry by years.

This year the U.S. had moved to require foreign chip manufacturers using U.S. equipment to receive a license before selling semiconductors to the Chinese company Huaweii. The move cut off Huaweii from chips manufactured by TSMC, and SMIC would be the natural option to succeed but they cannot manufacture at scale now due to being cut off from manufacturing supplies and equipment. This leaves China with very few options to fill their gap in a critical part of the tech industry.

Source: Brookfield Brief