As soon as HiSilicon was cut off from TSMC’s services, most sources began to pin their hopes of “strengthening China’s semiconductor sovereignty” with Shanghai-based SMIC. The latter has already mastered the 14-nm technology and is raising capital for the transition to the 12-nm process technology. It became known last week that the US authorities may impose sanctions against SMIC.
Information about this was spread by Reuters, citing its own sources. According to them, representatives of the Pentagon have approached the relevant committee in the US government with a proposal to sanction SMIC for ties with the Chinese military sector. So far, there is no information about the readiness of the US authorities to follow the advice of the US military, and the SMIC company has already begun to justify itself, assuring the American side of releasing products exclusively for commercial and civilian needs.
If the Pentagon’s plan is approved, then SMIC will be subject to the same restrictions as Huawei or HiSilicon. The supply of equipment and software that is used in lithography will be prohibited to any company around the world if they use technology of American origin. Previously, SMIC had already assured the public that in the case of sanctions against Huawei, it would follow the requirements of US export control rules. According to unofficial data, SMIC has already managed to launch the production of 14nm processors for the needs of Huawei, but after the introduction of two-stage sanctions in May and August of this year, it was forced to abandon cooperation with the disgraced Chinese giant in this area.
According to Jefferies estimates, at least 50% of SMIC’s lithographic equipment comes from the United States. In many ways, this is what the company owes its rapid progress in mastering advanced lithography, as well as its engineering staff with experience at TSMC. This year, SMIC began to actively raise capital for the development of mass production of 12nm products, for this, new shares worth several billion dollars were issued. SMIC has formed a joint venture with Beijing Municipality to build a 28nm component production line.
The Chinese authorities are interested in the production of 7nm products in the country by the middle of this decade. The main stake was made on SMIC in this regard. If American sanctions against this company are indeed imposed, then this will serve as a weighty reason for the further escalation of international tension. After the news appeared, SMIC shares on Chinese stock exchanges fell in price by 15 to 21%.
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