U.S. Hits Chinese Chipmaker SMIC With Sanctions

Another weekend, another salvo in the U.S.-China tech tension saga.

On Friday, the U.S. slapped sanctions on Semiconductor Manufacturing International Corporation (SMIC), China’s biggest chipmaker. The U.S. Department of Commerce notified companies that tech exports to SMIC carry an “unacceptable risk” of being repurposed for “military end use,” per the FT.

The sanctions could bar U.S. companies—or international firms that use “U.S. origin technology”—from doing business with SMIC. As always, we’ll need to see how/whether the sanctions are enforced...and what companies receive licenses to continue exporting to SMIC.

It was the best of times: SMIC raised $7.6 billion when it went public on Shanghai’s Star market earlier this year. While these sanctions aren’t quite the U.S. nuclear option, they’re pretty close. SMIC may not be able to access key chipmaking technology.

Big picture: In China, this could really sting for the foreseeable future. Long term, it will expedite the country’s well-capitalized push for semiconductor self-sufficiency…

...and China is creating an “unreliable entities list,” its answer to the U.S.’ Entity List. New bargaining chips.