SMIC In ‘Complete Shock’ Over US Sanctions Threat

Chinese chipmaker SMIC (Semiconductor Manufacturing International Corp) has reacted with ‘shock’ to news that it could be added to a US trade blacklist.

Shares in SMIC reportedly fell 23 percent after Reuters reported late last week that the US Department of Defense could add SMIC to the trade blacklist of Chinese tech companies.

SMIC issued a statement, and said it was in “in complete shock” over the news but was open to communication with US officials in hopes of resolving any misunderstandings.

Trade blacklist

“SMIC solemnly declares that the Company, a public company listed on the Hong Kong Stock Exchange and the Sci-Tech Innovation Board (STAR Market), is an international semiconductor foundry strictly complying with the laws and regulations of all jurisdictions where it performs its businesses,” said the firm.

“Since its inception, the Company has been fully compliant with all rules and laws,” it added. “SMIC has maintained long-term strategic partnerships with multiple US-based semiconductor equipment suppliers.”

It said that that SMIC plays an important role in the global semiconductor supply chain, and it makes semiconductors and provides services solely for civilian and commercial end-users and end-uses.

However it is reported that SMIC’s relationship to the Chinese military is under scrutiny by US officials.

“We have no relationship with the Chinese military,” SMIC said. “Any assumptions of the Company’s ties with the Chinese military are untrue statements and false accusations. The Company is in complete shock and perplexity to the news.”

“Nevertheless, SMIC is open to sincere and transparent communication with the US Government agencies in hope of resolving potential misunderstandings,” it concluded.

Entity list

It seems as though the Pentagon made a proposal to place SMIC on the entity list, similar to the listings of other Chinese firms such as Huawei and ZTE.

SMIC is the largest Chinese chip manufacturer but is not as big as market leader Taiwan Semiconductor Manufacturing Co Ltd.

If the US Commerce Department were to place SMIC on its entity trade list, it would also hurt Huawei, as SMIC is one of Huawei’s chip suppliers.