United States Suspends Exports To China’s Top Chipmaker SMIC – Report

The United States has reacted to last year’s arrival of Huawei’s flagship smartphone, that surprised the market due its cutting-edge chip, despite US sanctions.

Reuters, citing three people familiar with the matter, reported that the Biden Administration has targetted China’s top chipmaker by cutting off Semiconductor Manufacturing International Corp (SMIC) from American imports.

It comes Canada-based TechInsights had last September produced a teardown report of the Huawei’s Mate 60 Pro smartphone, which revealed that Huawei and SMIC had built an advanced 7-nanometre processor to power its latest smartphone.

US investigation

The discovery of such an advanced processor had surprised Western officials, after sweeping efforts by the United States to restrict China’s access to advanced foreign chip technology.

The revelation prompted US lawmakers at the time to call on the White House to further restrict export sales to both companies.

SMIC is the largest contract chip maker in China, and it is a partially state-owned venture. Like Huawei, it had been included in the export restrictions set up by the US government since 2019.

Days after the teardown of the Huawei’s Mate 60 Pro smartphone, the US began an investigation.

US National Security Adviser Jake Sullivan confirmed that the US needed “more information about precisely its character and composition” to determine if parties bypassed American restrictions on semiconductor exports to create the new chip.

Export permissions

Now Reuters, citing unnamed sources, has reported that the Biden administration has been quietly cutting off SMIC’s most advanced factory from more American imports.

Late last year, the US Commerce Department sent dozens of letters to US suppliers to Semiconductor Manufacturing International Corp, suspending permission to sell to its most advanced plant, two people familiar with the matter, told Reuters.

While many companies had already stopped selling to SMIC South, as the unit is known, the letters halted millions of dollars worth of shipments of chipmaking materials and parts from at least one supplier, Entegris, one of the people reportedly told Reuters.

Reuters noted it had found no evidence that Entegris had violated any US laws or regulations.

Entegris said it made the shipments in accordance with a valid export license and halted them after receiving letters from the Commerce Department suspending permission to send products to SMIC South.

The Massachusetts-based company, which produces filters, gases, chemicals, and products for handling wafers, the building blocks for making chips, said it monitors and complies with the “rapidly evolving regulatory requirements” for international trade affecting the chip industry.

China response

SMIC did not respond to a request for comment, Reuters reported.

It also noted that Huawei, the White House and the Commerce Department declined to comment on the matter.

But the Chinese embassy in the US did respond.

“This is out-and-out economic bullying and will inevitably backfire,” a spokesperson for the Chinese embassy in Washington was quoted as saying. “We urge the US side to stop overstretching the concept of national security and abusing the state power to suppress Chinese companies.”

In December last year, an analysis from TechInsights of Huawei’s latest 5G-capable flagship smartphone, the Mate 60, showed “significant progress” in China of engineering radio frequency chips and 5G baseband processors, supplanting parts previously imported from the US.

TechInsights found the handset uses RF witches from Chinese firms Maxscend Microelectronics and power-amplification modules from Beijing OnMicro Electronics, parts that are most commonly provided by US suppliers Skyworks Solutions and Qorvo, respectively.

US commerce secretary Gina Raimondo has previously stated the agency would take the “strongest possible” action to protect national security, and said the agency needed more resources to enforce the trade sanctions and that China “is not our friend.”