The US government has imposed sanctions on China’s biggest chipmaker, dealing further damage to the country’s semiconductor industry after cutting Huawei off from its chip suppliers, reported the Financial Times.
On Friday, the US Department of Commerce told companies that exports to Semiconductor Manufacturing International Corporation (SMIC) posed an “unacceptable risk” of being diverted to “military end use”, according to a copy of the letter seen by the Financial Times.
The move threatens to cut off China’s biggest chipmaker from crucial US software and chipmaking equipment. Companies now require licenses to export such products to SMIC.
“It all depends on how the US implements this. In the worst-case scenario, SMIC is completely cut off, which would severely set back China’s ability to produce chips. This would be a tipping point for US-China relations,” said Paul Triolo, head of tech policy analysis at consultancy Eurasia Group.