Chinese Semiconductor Foundry SMIC Confirmed as Subject to US Regulations

SMIC Mentions Possible Delays in Equipment, Parts, and Raw Material Supply
Caixin Evaluates, "SMIC Sanctions Are Not the Most Severe"

[Asia Economy Beijing=Special Correspondent Jo Young-shin] It has been officially confirmed that SMIC, China's largest semiconductor foundry (semiconductor contract manufacturing) company, has become a target of U.S. government export controls.

SMIC is a company nurtured by the Chinese government to achieve 'semiconductor industry self-reliance' in the country.

According to the economic media Caixin, SMIC stated in a statement released on the night of the 4th, "We have learned that the U.S. Department of Commerce's Bureau of Industry and Security has sent letters to some cooperating companies based on the U.S. Export Administration Regulations."

SMIC explained that, according to the U.S. Department of Commerce's requirements, cooperating companies must obtain prior approval from the U.S. government before supplying equipment, parts, raw materials, etc., to SMIC.

SMIC said, "We are currently assessing the impact of the sanctions," adding, "The supply of some U.S.-made equipment, parts, and raw materials may be delayed or become uncertain, which could have a significantly adverse effect on future production and management."

[Image source=EPA Yonhap News]

This is the first time that the U.S. government's export controls on SMIC have been confirmed as fact. News that the U.S. had started export controls targeting SMIC began circulating through some foreign media, including the U.S. and the U.K., around the 26th of last month.

However, until now, U.S. companies that had received notification letters regarding the strengthening of export controls had never officially confirmed the related news.

If the U.S. export controls take full effect, SMIC will find it difficult to purchase semiconductor production equipment, materials, and software from the U.S.

It is known that SMIC heavily depends on U.S.-made equipment and materials throughout almost all semiconductor production processes, including cleaning, ion implantation, thin film deposition, and inspection.

However, this export control differs from the 'blacklist sanctions' previously applied to other Chinese companies such as Huawei (Huawei).

The export controls targeting SMIC are based on Section 774, Paragraph 21 of the Export Administration Regulations (EAR), which restricts exports of products that could ultimately be used for military purposes in certain countries such as China, Russia, and Venezuela.

In letters sent to domestic companies, the U.S. stated that there is a risk that products could ultimately be used for China's military purposes and required approval before supplying products to SMIC.

Currently, the 'blacklist' applied by the U.S. Department of Commerce to companies like Huawei can require not only domestic but also foreign companies to prohibit exports to the targeted companies, but the EAR provision basically applies to U.S. companies.

Caixin evaluated, "The sanctions imposed on SMIC are not the most severe."

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