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US places sanctions on China's biggest chipmaker

James Cook
·2-min read
The SMIC factory in Shanghai - Shutterstock
The SMIC factory in Shanghai - Shutterstock

The US government has imposed trade sanctions on China’s largest chipmaker in a further escalation of the global trade war that has already ensnared Huawei and TikTok.

American suppliers of equipment to Semiconductor Manufacturing International Corporation (SMIC), a key producer of components used in smartphones and other devices, will now have to request permission from Washington to continue working with the company.

A letter from the US Department of Commerce sent to business on Friday claimed that exporting American technology to SMIC “may pose an unacceptable risk of diversion to a military end use in the People’s Republic of China”, the Wall Street Journal reported.

A SMIC spokesman denied the allegations. “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.”

The company previously said it was "in complete shock and perplexity" after the Pentagon announced earlier this month that it was considering backing sanctions on SMIC such as putting it on the US government’s entity list.

New US sanctions on SMIC are not as severe as a complete trade block, raising the possibility that American suppliers will still be able to work with the company on a case-by-case basis.

Increased US sanctions on Huawei, another Chinese technology business, introduced earlier this year have threatened the company’s ability to continue producing devices. New trade rules blocked the company’s access to American chip design software, limiting its ability to keep up with rivals.

These American sanctions contributed to the UK Government’s decision in July to block the company from supplying British 5G networks from 2027.

The US government has also forced viral video app TikTok to enter into a partnership with American software company Oracle following concerns over TikTok’s access to personal information on Americans.