In response to Semiconductor Manufacturing International Corp.'s (SMIC) development of a complex semiconductor for Huawei's Mate 60 Pro phone, the Biden administration has tightened limitations on its most advanced facility.
SMIC suppliers received letters from the US Commerce Department in late 2023 prohibiting shipments to SMIC South, according to a Reuters report. While several companies had already ceased selling to SMIC South, the Commerce Department's letters stopped millions of dollars worth of shipments, including those from Entegris, a chipmaking material producer. Entegris, complying with a valid export license, ceased shipments after receiving Commerce Department letters.
(Photo : Kevin Frayer/Getty Images)People look at newly launched smartphones at a Huawei flagship store after the company unveiled new products on September 25, 2023 in Beijing, China.)
Mounting Pressure on China
SMIC, Huawei, the White House, and the Commerce Department have refrained from commenting on the matter. The Chinese embassy in Washington criticized the move as "economic bullying." This move underscores the Biden administration's efforts to restrict US technology flow to SMIC, responding to growing pressure and concerns about its capacity for sophisticated chip manufacturing.
The pressure increased after Huawei, a sanctioned Chinese telecom giant, introduced the Huawei Mate 60 Pro with an advanced chip. Critics argue that the Commerce Department's measures are insufficient, with Republican Congressman Michael McCaul expressing concerns about the agency's handling, stating that it "casts further doubt on its ability to fulfill its national security mission."
The US has been gradually restricting the access of SMIC and Huawei to advanced technology. Both companies were added to a trade restrictions list, and while Trump allowed certain shipments to them, the Biden administration introduced rules in October 2022 banning U.S. suppliers from sending semiconductor tools and materials to advanced Chinese-run chipmaking factories, including SMIC South.
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Entegris shipped chipmaking parts to SMIC South between October 2022 and the end of last year. The company reported that recent U.S. export regulations have reduced its ability to sell products in China, with potential further demand reductions in the future. Experts suggest SMIC South may seek alternative sources for chipmaking materials but could face production interruptions if its U.S. supply chain is abruptly cut off.
US Chip Restrictions Effectiveness Questioned
According to a September teardown of the phone, SMIC South is the only SMIC factory capable of producing the 7-nanometer chip for the Mate 60 Pro. Additionally, a chip designer part-owned by SMIC still has access to state-of-the-art US chip design software.
TechTimes previously reported that Chinese companies are adapting their strategies in response to recent US export controls. Tech giants have proactively stockpiled AI chips, anticipating potential tech conflicts, while smaller AI players struggle to keep up with these developments. This adaptation is seen as a response to US export restrictions on high-performance graphic processing units from Nvidia to China before the escalation of a tech conflict between the two nations.
In November 2023, the bipartisan select committee on China in the US House of Representatives released a 741-page annual report detailing how Chinese companies are acquiring US chipmaking equipment to produce advanced semiconductors, violating new US export restrictions.
The report highlights challenges in preventing Huawei from having its advanced 7-nanometer chip manufactured at SMIC for the Huawei Mate 60 Pro smartphone. Despite trade restrictions in 2019 and 2020, Huawei and SMIC managed to circumvent them, raising questions about the effectiveness of US export laws.
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