US Targets China's Leading Chipmaking Plant Following Huawei Mate 60 Pro

The Biden administration has imposed restrictions on China's top chipmaker, SMIC, following its production of a sophisticated chip for Huawei's Mate 60 Pro phone. The US Commerce Department sent letters to American suppliers, suspending their permission to sell to SMIC's most advanced plant, SMIC South. The move halted millions of dollars' worth of shipments of chipmaking materials and parts from at least one supplier, Entegris.

Credit: REUTERS

The Biden administration has intensified its efforts to curb China's top sanctioned chipmaker by imposing restrictions on its most advanced factory. This move comes after the factory produced a sophisticated chip for Huawei's Mate 60 Pro phone, according to three anonymous sources familiar with the matter.

Late last year, the US Commerce Department sent numerous letters to American suppliers of Semiconductor Manufacturing International Corp (SMIC), suspending their permission to sell to the company's most advanced plant, known as SMIC South. While some companies had already ceased selling to SMIC South, these letters halted millions of dollars' worth of shipments of chipmaking materials and parts from at least one supplier, Entegris.

Entegris, a Massachusetts-based company specializing in filters, gases, chemicals, and products for chip production, stated that it had complied with a valid export license when making the shipments. However, it halted the shipments after receiving letters from the Commerce Department suspending permission to send products to SMIC South.

The Chinese embassy in Washington criticized the US actions, calling it "economic bullying" and urging the US to stop stretching the concept of national security to suppress Chinese companies. SMIC, Huawei, the White House, and the Commerce Department declined to comment on the matter.

The license suspensions by the Commerce Department demonstrate the Biden administration's response to mounting pressure from Republican China hawks to restrict the flow of US technology to SMIC and undermine its ability to produce advanced chips. This pressure has been building since August when Huawei, a sanctioned Chinese telecoms giant, unveiled the Mate 60 Pro phone powered by a sophisticated chip. Despite ongoing efforts by the US to hinder China's semiconductor capabilities, the Mate 60 Pro symbolized China's technological resurgence.

Critics argue that the Commerce Department's actions do not go far enough. Republican Congressman Michael McCaul, chair of the Foreign Affairs Committee, stated that the agency should have acted sooner and criticized its ability to fulfill its national security mission.

The United States has been gradually limiting SMIC and Huawei's access to advanced US technology. Huawei was added to a trade restrictions list in 2019 for alleged sanctions violations, while SMIC was added in 2020 for alleged ties to the Chinese military industrial complex. However, the Trump administration allowed certain shipments to both companies, enabling billions of dollars in US goods to reach them.

In October 2022, the Biden administration introduced new rules that effectively banned US suppliers from sending semiconductor tools and materials to advanced Chinese-run chipmaking factories, including SMIC South. However, companies with preexisting licenses were allowed to continue supplying the facility. Entegris, for example, shipped chipmaking parts and materials to SMIC South between October 2022 and the end of last year.

The impact of these restrictions on SMIC South's production remains uncertain. While the facility may seek alternative sources from China, Taiwan, Japan, and South Korea, a sudden cutoff from its US supply chain could potentially disrupt production for several months, depending on inventory levels. Experts believe that SMIC South is the only factory within SMIC capable of producing the 7-nanometer chip used in the Mate 60.

Doug Fuller, a chip industry expert, stated that there is little doubt that SMIC South is the factory in question. The situation highlights the ongoing tensions between the US and China in the realm of technology and underscores the challenges faced by Chinese companies in accessing advanced semiconductor technology.

---

• The Biden administration has imposed restrictions on China's top chipmaker, SMIC, following its production of a sophisticated chip for Huawei's Mate 60 Pro phone.

• The US Commerce Department sent letters to American suppliers, suspending their permission to sell to SMIC's most advanced plant, SMIC South.

• The move halted millions of dollars' worth of shipments of chipmaking materials and parts from at least one supplier, Entegris.

Source: REUTERS