As reported by the Financial Times, the United States has imposed export restrictions on SMIC. This report can result in cutting off SMIC’s access to U.S. hardware and software.
Semiconductor Manufacturing International Corporation is a Chinese partly state-owned publicly-listed semiconductor factory organization. Founded in April 2000 by Richard Chang Ru-gin, SMIC’s headquarters is in Shanghai.
SMIC is the largest chipmaker company in China. SMIC has marked orders worth more than $2 billion with the U.S. organizations Applied Materials and Lam Research since 2019. The American organizations were SMIC’s top and third-biggest hardware providers, separately, somewhere in the range of 2017 and 2019.
According to the co-investment agreement, SilTech Shanghai invested $102 million as a capital contribution for 19.6% ownership interest in Changjiang Xinke, a company incorporated in Jiangsu province, China, which is accounted for as an associate of the group.
In June 2015, the joint venture company’s focus was to be the R&D for the next generation CMOS logic technology and was designed to build China’s most advanced integrated circuit development R&D platform.
In June 2016, SMIC, LFoundry Europe, and Marsica went into a deal and bought understanding compliant with which LFoundry Europe and Marsica consented to sell. SMIC agreed to buy 70% of the corporate capital of LFoundry S.r.l. for total money thought of €49 million subject to alteration.
They made huge profits in the coming years. In fact, in 2018, SMIC had gross earnings of $747 million and a net profit of $149 million, along with $3.6 billion in revenues.
However, later, their performance declined, and they faced low trade volumes. And as a result, in May 2019, SMIC voluntarily delisted from the Nasdaq and New York Stock Exchange (NYSE).
The US set export controls on China’s largest chipmaker, expressing an “unacceptable risk” of military use. However, the company denied having any relationship with the military. For this reason, companies will now require a license to sell specific products to SMIC.
The head of semiconductors at consultancy Intralink in Shanghai, Stewart Randall, said that SMIC would lose access to the US equipment. Further, it will also lose the equipment from countries who want to be allies to the United States.
Besides, SMIC was already struck by U.S. sanctions against Chinese phone maker Huawei.
Its second-largest supplier was ASML, a Dutch chip tool manufacturer. According to the reports, SMIC purchased a cutting-edge lithography machine from them in 2018, which has not been shipped yet because of the U.S. government’s pressure. The device is estimated worth $150 million.
The analysts say that it will be difficult for the Chinese companies to supply equipment to SMIC to manufacture chips.
Furthermore, in response to U.S. sanctions, Global Times, a Chinese state-owned newspaper, has called for a new “long march” for China’s tech industries to rid itself of U.S. dependence.
Image courtesy of Ascannio/Shutterstock
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