The Biden administration has intensified its scrutiny of China's semiconductor industry by targeting Semiconductor Manufacturing International Corp (SMIC), China's leading chipmaker, with new restrictions that cut off its most advanced factory from key American imports. This move comes in the wake of SMIC's involvement in producing an advanced chip for Huawei's Mate 60 Pro smartphone, raising alarms within the U.S. government regarding the potential bypass of existing sanctions.
According to sources familiar with the matter, the Commerce Department dispatched numerous letters to U.S. suppliers of SMIC, particularly targeting the company's most sophisticated plant, known as SMIC South, as reported by Reuters. These communications effectively suspended previous permissions allowing sales to this facility, impacting suppliers like Entegris, a Massachusetts-based company known for its contributions to chipmaking through filters, gases, chemicals, and wafer handling products.
Entegris confirmed compliance with a valid export license for shipments made to SMIC South, emphasizing its commitment to adhering to the rapidly changing regulatory landscape affecting the semiconductor industry. The company halted its shipments following the Commerce Department's directive, underscoring the broader implications of U.S. policy shifts on the global supply chain for semiconductor manufacturing.
The Chinese embassy in Washington criticized the U.S. actions as "economic bullying," cautioning against the repercussions of such measures on international trade relations. The tightening of restrictions reflects the Biden administration's broader strategy to curb China's access to advanced semiconductor technology, a stance that has garnered support from Republican lawmakers urging more decisive action against both SMIC and Huawei.
The controversy gained momentum following Huawei's launch of the Mate 60 Pro, powered by a sophisticated chip that symbolized China's technological resilience despite U.S. efforts to limit its semiconductor capabilities. The phone's advanced chip, believed to be produced by SMIC South, prompted a review by the Biden administration and reignited debates over the effectiveness of U.S. export controls.
Critics, including Republican Congressman Michael McCaul, have voiced concerns over the timeliness and adequacy of the Commerce Department's response, highlighting the challenges in enforcing export regulations without undermining the global semiconductor ecosystem. The recent measures against SMIC, while significant, have sparked discussions on the need for a more comprehensive approach to address the complexities of international technology transfer and national security.
China's reliance on domestic and alternative sources for chipmaking components may mitigate some impacts of the U.S. restrictions, but the abrupt disruption of supplies from key U.S. partners like Entegris could pose short-term challenges for SMIC's operations. The semiconductor industry's interconnected nature necessitates careful consideration of policy measures to avoid unintended consequences on innovation and global supply chains.
As the U.S. continues to navigate the delicate balance between safeguarding national security interests and maintaining its leadership in the technology sector, the actions taken against SMIC and the broader implications for U.S.-China relations in the semiconductor industry remain a focal point for policymakers, industry stakeholders, and international observers alike.
