According to Reuters news agency, quoted by Bloomberg, the Trump administration is preparing to add four new companies to its list of companies controlled or owned by the Chinese military. Among them SMIC, the largest chip manufacturer in the country.
The trade war never ends
Despite the arrival of a new American president in January, the trade war between the United States and China seems far from over. Donald Trump’s administration is indeed determined to continue sanctioning the Middle Kingdom. After the Huawei affair, the conflicts with TikTok and WeChat, and after Huawei and ZTE were viewed as threats to national security, the authorities are now set to add to the list of Chinese companies that are allegedly linked to their country’s military.
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This applies to Semiconductor Manufacturing International Corp. (SMIC), China National Offshore Oil Corp. (CNOOC), China Construction Technology and China International Engineering Consulting Corp. With her addition, the blacklist will now have 35 Chinese companies. A decree signed by Donald Trump and going into effect January 11, 2021 prohibits American companies from buying equipment from these companies.
Strong impact on SMIC
The impact on SMIC can be very hard to cash in. In fact, it is the main manufacturer of electronic chips in the Middle Kingdom. His customers include giants like Qualcomm, Broadcom and even Texas Instruments. In particular, blacklisting will prevent SMIC from sourcing material from American suppliers such as Applied Materials Inc., who are known for making very advanced chip making equipment.
As a result, SMIC could continue to lag behind its competitor Taiwan Semiconductor Manufacturing Co. The latter is already marketing 5-nanometer technology, which is two generations ahead of the Chinese company, according to Bloomberg. When asked by Reuters, SMIC said it would continue to “work constructively and openly with the US government”. The company also affirmed that it “has no relationship with the Chinese army and does not manufacture anything for users or military end uses”.
For its part, the Chinese government hopes that the imminent arrival of Joe Biden will fundamentally change relations with the United States: “We hope that the United States will create an open, fair and non-discriminatory environment for Chinese companies that work in the United States instead of expanding the concept of national security and imposing sanctions or discriminatory measures against Chinese companies, ”said Hua Chunying, spokesman for the Foreign Ministry.