The deteriorating Sino-US relations are getting worse and there is no indication that things will change anytime soon. The U.S. and China are two technology powerhouses in the world. Unfortunately, the decaying relationship between these countries is affecting the technology industry. Presently, most American technology companies can not do business freely with their Chinese counterparts. A new Chinese law prevents technology companies from shipping out certain tech without government approval. This law most-likely aims at stopping TikTok from selling certain core algorithms to an American company. After including a lot of Chinese companies in its entity list, it now appears that SMIC is next.
According to a Reuters report, the Trump administration is considering whether to include SMIC in its entity list. SMIC is China’s largest chip manufacturer. If the U.S. includes SMIC to its trade blacklist, it is further strengthening its clampdown on Chinese companies.
A Pentagon spokesperson said that the Department of Defense is working with other agencies to decide whether to take action against Semiconductor Manufacturing International (0981.HK). This will force US suppliers to obtain permits before shipping the components to the company. SMIC and the Chinese Embassy in Washington did not immediately respond to requests for comment.
The Trump administration often uses entity lists: more than 275 Chinese companies have been blacklisted. The likes of Huawei Technologies and ZTE Corporation are on its entity list.
SMIC is the largest chip manufacturer in mainland China. It is second only to the world’s largest chip manufacturer, TSMC. SMIC is seeking to establish foundries to manufacture computer chips that can compete with TSMC.
The U.S governments actions are political – Ren Zhengfei
Since the U.S. clampdown on Chinese companies, Huawei is one of the most affected. However, Huawei’s founder and CEO, Ren Zengfe believes that the U.S. actions are political.
Ren Zhengfei bluntly said that “some politicians in the United States want us to die”. He added: “We also want to light the “beacon” of 5G, but as soon as the “match” was lit, the United States hit us with a “big stick” and knocked us unconscious. At first, I thought that there was something wrong with our compliance system, and I was reflecting on it. As a result, the second, third, and fourth bars were hit”.
In addition to including Chinese companies in the entity list, the U.S. is also banning popular Chinese apps. The likes of WeChat and TikTok will not be active in the U.S. very soon.