China Announces Retaliation Against Huawei Sanctions... Semiconductor Expansion Also Accelerates (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Beijing=Special Correspondent Park Sun-mi] SMIC, China's largest semiconductor foundry company, is expanding its scale with a $2.2 billion injection of government funds. As Huawei's semiconductor supply faces disruptions due to repeated attacks from the United States, the Chinese government is accelerating its semiconductor ambitions and has announced a counterattack.

According to Bloomberg on the 17th (local time), SMIC plans to raise more than $3 billion through stock issuance on the Shanghai Stock Exchange. A government-affiliated fund will participate in the stock issuance, investing $2.25 billion, which accounts for most of the $3 billion.

SMIC stated that after the fundraising, the company's registered capital will increase from the existing $3.5 billion to $6.5 billion. It also reported that its current production capacity of 6,000 14-nanometer chips per month could increase sixfold to about 35,000 units. SMIC also announced plans to execute $4.3 billion in capital expenditures this year, an increase of $1.1 billion from the original plan.

The Chinese government's investment in SMIC was decided amid the U.S. government's moves to block semiconductor companies using American technology from supplying Huawei.

On the 15th, the U.S. Department of Commerce required that third-country semiconductor companies using any American technology must obtain U.S. government approval before selling products to Huawei. Furthermore, with Taiwan's TSMC, which has supplied semiconductors to Huawei, deciding to establish a cutting-edge factory in the U.S., securing semiconductor supply routes for Huawei has become even more difficult.

The Chinese Ministry of Commerce issued a statement regarding these U.S. export control measures, saying, "China is paying close attention to the export restrictions announced by the United States against Huawei. China firmly opposes these measures." It added, "The United States is abusing export controls under the pretext of national security by mobilizing national power," and criticized, "This is oppression against specific companies of other countries and an act that destroys market principles and fair competition." It also warned, "China will take all necessary measures to firmly protect the legitimate rights and interests of Chinese companies," signaling a counterattack.

With the U.S. openly sanctioning Huawei and China announcing a counterattack, it is highly likely that Huawei's orders to SMIC will increase after SMIC receives government funds and expands its production capacity. This aligns with China's acceleration of semiconductor self-sufficiency in preparation for a technological cold war with the U.S.

Huawei's semiconductor design subsidiary HiSilicon has no semiconductor manufacturing plants and has entrusted most of its product manufacturing to TSMC. However, since the end of 2019, it has been shifting orders from TSMC to the domestic foundry company SMIC. Despite evaluations that SMIC's technology lags behind, choosing a domestic company over TSMC, the world's top foundry, indicates China's strong will to achieve self-sufficiency in all semiconductor processes from design to production.

This content was produced with the assistance of AI translation services.