The Biden-Harris administration has intensified its actions against China's leading chipmaker, Semiconductor Manufacturing International Corp. (SMIC), by restricting its most advanced factory from receiving more American imports, Reuters reports.

This sanction is in reaction to SMIC's recent production of a high-value chip for Huawei's Mate 60 Pro smartphone, which was seen as a substantial leap in China's semiconductor capabilities despite US efforts to curb the country's technological progress.

The US Commerce Department has reportedly sent dozens of letters to US suppliers to SMIC, suspending authorisation to sell high-tech products to SMIC South, SMIC's most advanced plant.
The suspension affects shipments of chipmaking components and parts, with at least one supplier, Entegris, ending millions of dollars worth of shipments after receiving the letter. The Massachusetts-based manufacturer of chemicals, filters, and products for wafers stopped shipping to China upon receiving instructions from the Commerce Department to revoke their export license.

Why does it matter?

SMIC manufactures a 7-nanometer chip, the most advanced semiconductor produced locally so far, to power the Huawei Mate 60 Pro. Washington's actions are a continuation of the policy to deprive SMIC and Huawei of access to advanced US technology, with Huawei added to a trade restrictions list in 2019 and SMIC in 2020. The US government unveiled new rules in October 2022, which effectively banned US suppliers from sending semiconductor tools and materials to advanced Chinese-run semiconductor factories, including SMIC.

Suspending licenses and ending shipments could disrupt SMIC's operations and capability to produce advanced chips, potentially impacting the global semiconductor supply chain. The situation underscores the current geopolitical tensions between the US and China, particularly in the technology sector, and the challenges faced by global tech companies to navigate fast-evolving regulatory requirements. The Chinese embassy in Washington has criticised the US actions as 'economic bullying' and warned that such measures will backfire.

The intensification of US export restrictions is part of the Biden administration's broader efforts to curb China's technological advancement, maintain national security by preventing the flow of sophisticated dual-use technology to Chinese companies, and slow down Beijing's military progress.