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US to Consult Allies Over Ban on Sales to China’s SMIC

Officials at various US agencies talked about a proposal to toughen sales to chipmakers in China

Former TSMC exec says joining SMIC was a 'foolish' move.
SMIC, China’s largest chipmaker, is among Chinese firms banned from receiving US investment due to suspected ties to defence or surveillance technology. Photo: AFP.


The US has still not decided whether to block more sales of domestic technology to Beijing-based Semiconductor Manufacturing International Corporation (SMIC), but has raised the possibility of discussing with allies further restrictions on selling chip-making equipment to China, sources said.

Officials at a meeting of various US agencies talked about a proposal to toughen sales to SMIC and other chipmakers in China, the sources said.

The officials appeared to agree that the Washington should work with friendly countries on a more restrictive policy, one source said. A spokesperson for the White House declined to comment.

The Trump administration placed SMIC on the US Department of Commerce’s trade blacklist late last year over concerns about SMIC aiding China’s military.

The listing, which requires US suppliers to obtain a licence before shipping chipmaking equipment and other goods, allows most sales to be decided on a case-by-case basis.

Equipment Sales To Be Denied

However, equipment that can be used to make only the most advanced, 10-nanometre and smaller chips is held to a higher standard and is likely to be denied.

The policy change being considered would restrict sales of items that could also be used for less advanced chips.

Analysts say US actions have raised doubts over SMIC’s prospects. Shares in the Hong Kong-listed chipmaker rose 0.5% in morning trading on Friday to HK$18.52 but are off nearly 14% for the year to date.

“Capacity expansion is rolling out amid uncertainties over licence approvals, supply constraints and logistics disruptions,” Ronnie Ho, a Hong Kong equity analyst at CCB International, said.

“Due to uncertainties in licensing approvals and technological development, we lower our target price from HK$33.20 to HK$29.40,” Ho added.


  • Reuters, with George Russell




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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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