US ban on chipmaker giant SMIC could put Huawei in dire straits
The US government has hundreds of companies on its so-called Entity List and a good number of them come from China. One of the highest-profile names on that list in recent years has been, of course, Huawei. But if you thought the US was done with China’s biggest phone and network manufacturer, it seems to be moving to squeeze out any remaining life from Huawei. Its rumored next move, however, could provoke China to finally retaliate and throw the global economy further into chaos.
Reuters reports that the US Defense Department has
recommended placing SMIC, China’s biggest semiconductor company and chip maker,
on the entity list. As always, the allegations revolve around the company’s
ties to the Chinese government, something that SMIC unsurprisingly denies. If
approved, this would mean that US companies will need to apply for a license to
sell or export not just materials but even software for SMIC’s use.
This could, in effect, cripple SMIC as any company supplying
anything and everything that was made using American materials and technologies
is covered by the ban. While SMIC might be able to get those from other companies
outside the US, it might not be able to do so quickly, especially if it has to
double-check that said sources don’t also use US products.
It shouldn’t be a surprise by now that Huawei will be
affected by this unexpected proposal. Huawei already lost TSMC because of a new
export ban from the Commerce Department and SMIC would have been the company’s
Plan B. Now it seems that it will have to find another way out of this
seemingly never-ending predicament.
China is unlikely to take this sitting down and could be the
last straw before it acts in kind. But rather than simply affecting the
countries and companies involved, the back and forth between the two economic
giants will undoubtedly also disrupt supply chains, production, and even sales
of products around the world as well.
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