SMIC blacklisted by the American authorities

The U.S. Bureau of Industry and Security (BIS) announced today that it would add as many as 60 Chinese companies to the list of entities, effectively restricting their access to key U.S. technologies, including their ability to partner with U.S. companies.

SMIC China’s armed arm in semiconductors

Among the names on the new list is Semiconductor Manufacturing International Corporation (SMIC), China’s largest chip foundry. We know that the Chinese authorities are pushing to develop this sector and ensure its independence. SMIC, based in Shanghai, is a supplier of Qualcomm Inc. and Broadcom Inc.. The company is at the heart of Beijing’s ambition to build a world-class semiconductor industry and break free from dependence on American technology. The US sees China’s ascendancy and its ambitions to dominate the spheres of technology as a potential geopolitical threat. For them, the rise of SMIC is also a demonstration of the implementation of China’s doctrine of military-civil fusion. For BIS there is evidence of activity between SMIC and entities of concern in the Chinese military-industrial complex. While China’s desire for power in the technology sector is indisputable, American rhetoric on military risks is classic and its effects and effectiveness have been known for years, long before the Trump administration, throughout the world.

Slowing down China and penalising those who collaborate with it

Putting SMIC on the blacklist will slow down China’s development ambitions in this area. Indeed, American companies selling equipment or products to SMIC to manufacture chips of 10 nanometres or more will face a “presumption of refusal” on their licence applications, while items intended to produce chips more mature than 10 nanometres will be considered on a case-by-case basis, according to a senior trade official. For other non-US companies that export to SMIC, they will be subject to certain restrictions (such as access to the US market). The US authorities have already encouraged foreign companies that also supply equipment for the manufacture of advanced chips to consider the consequences of their actions.