Chips are down as US imposes curbs on SMIC

Semiconductor Manufacturing International Corporation (0981) yesterday said it has not received notice of any US restrictions against it and denied that it links to China's military.

This came after the United States imposed restrictions on exports to the China's top chipmaker after concluding there is an "unacceptable risk" equipment supplied to it could be used for military purposes, while the chipmaker said it has not received.

Suppliers of certain equipment to SMIC will now have to apply for individual export licenses, according to a letter from the Commerce Department released on Friday and seen by Reuters.

The latest move marks a shift in US policy from earlier this year, when applicants seeking "military end user" licenses to sell to SMIC were told by the Commerce Department that the licenses weren't necessary, according to three people familiar with the matter.

In response, SMIC said it had not received any official notice of the restrictions and said it has no ties with the military.

"SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses," SMIC said. "The company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses."

SMIC is the latest leading Chinese technology company to face US trade restrictions related to national security issues or US foreign policy efforts. Telecoms giant Huawei Technologies had its access to high-end chips curtailed by its addition to a Commerce Department blacklist known as the entity list.

The US has moved to ban the popular short video app TikTok, citing national security concerns stemming from its Chinese ownership.

SMIC's new designation is not as severe as being blacklisted, which makes it difficult to get any export license approved.

US companies including Lam Research, KLA Corp and Applied Materials, which supply chipmaking equipment, may now need to get licenses to ship certain goods to SMIC.

It is unclear which suppliers received the letter, but typically once the Commerce Department comes to the conclusion that there is a risk of military use or diversion, it sends that information to the companies.