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January 4, 2024
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Biotech leaders embrace 2024 with hopeful prudence.

\* Key points:

  • China’s largest chipmaker SMIC could be added to US trade blacklist
  • The restrictions are part of the US’ ongoing crackdown on Chinese tech companies

China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC), may soon find itself added to the US trade blacklist, as part of the ongoing crackdown on Chinese tech companies. The restrictions could severely impact SMIC’s ability to continue sourcing American technology and equipment needed for manufacturing chips, leading to a significant setback for Chinese efforts to become self-sufficient in the semiconductor industry.

The looming blacklisting comes amid heightened tensions between the US and China over technology and trade. In recent years, the US has increasingly targeted Chinese tech companies due to concerns over national security and intellectual property theft. Companies like Huawei, ZTE, and TikTok have already faced US restrictions, with Huawei facing a complete ban on using US technology in its products.

SMIC is a critical player in China’s ambitions to become self-sufficient in semiconductor production, a sector that has traditionally been dominated by US and South Korean companies. The Chinese government has invested heavily in SMIC, looking to reduce reliance on foreign chip suppliers and bolster domestic semiconductor capabilities. However, SMIC still heavily depends on American technology and equipment, making it vulnerable to supply chain disruptions caused by US blacklisting.

If SMIC is added to the US trade blacklist, it would require American companies to hold a license before selling technology and equipment to SMIC. This would likely result in a significant slowdown in SMIC’s chip production, affecting not just Chinese companies but also international customers who rely on SMIC for their chip needs. Additionally, SMIC’s current customers, including US-based companies, may reconsider their partnership with SMIC due to concerns over possible sanctions.

The potential blacklisting of SMIC highlights the growing technological divide between the US and China, as both countries vie for dominance in the global tech industry. The US has long been at the forefront of semiconductor technology, while China has sought to catch up and reduce its dependencies on foreign suppliers. This rift may have broader implications for the world’s technology supply chains, as companies and countries face the possibility of being caught in the crossfire of geopolitical tensions.

For now, the decision to add SMIC to the US trade blacklist has not been finalized, but the move appears increasingly likely. As the US and China continue to clash over technology and trade, the semiconductor industry is becoming a key battleground. The outcome will not only affect the fortunes of individual companies but could also reshape the global tech landscape for years to come.

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