US Targets China's Largest Chipmaker After Huawei To Check Growing Chip Dominance

·2 min read
  • The U.S. government explored restrictions on shipments of chipmaking tools to China without hindering the global chip crisis, Reuters reports.

  • It sought to cripple advances by China's largest chipmaker, Semiconductor Manufacturing International Corp.

  • The Commerce Department weighed the possibility of banning exports of chipmaking tools to those Chinese factories that make advanced semiconductors at the 14 nm node and smaller to impede China's growing dominance in state-of-the-art chips.

  • The agency would allow those same tools for plants owned by the same firms but which make less advanced semiconductors to safeguard the supply of commodity chips.

  • SMIC began producing 14-nm chips in 2019. The U.S. added SMIC to a trade blacklist over alleged military ties in 2020.

  • The U.S. also influenced the Netherlands to stop ASML Holding NV (NASDAQ: ASML) from selling to China, mainstream technology essential in making a large chunk of the world's chips.

  • In 2019, the U.S. added Huawei Technologies Co., Ltd to a list of companies that U.S. firms can no longer trade with without a license citing national security risks. The "entity list" banned the company from acquiring technology from U.S. firms without government approval.

  • The U.S. government offered financial incentives and other enticements to countries severing ties with Huawei.

  • A surge in purchases of cars and personal electronic devices during the pandemic fueled a global chip crisis in late 2020. However, the economic slowdown helped eliminate the crisis for products like personal computers, Android smartphones, and television sets, despite the production remaining compromised by shortages, the Reuters report cited an analyst at Bernstein.

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