Reuters reported on Friday that the Trump Administration was considering barring us companies from supplying goods and services to SMIC (Semiconductor Manufacturing International Corp), China's biggest chipmaker. "In and before 2016, SMIC had been granted Validated End-User (VEU) authorization by the BIS and the company hosted several visits from U.S. Government officials", SMIC said. It said that SMIC's relationship with the Chinese military is under scrutiny, citing an unnamed USA official and two former officials briefed on the matter.
The entity list, which also includes Huawei, is made up of companies, institutions and governments that need to acquire licenses to trade with the US. As a result, the company looks to be concentrating its resources on growing its Infrastructure-as-a-Service (IaaS) business, Huawei Cloud.
Shares in China's largest contract chipmaker tumbled on Monday after reports that the U.S. was planning to blacklist the company in a move that could neuter the country's semiconductor industry. Ltd.in both production volume, technology and efficiency, Reuters said.
The company only recently introduced capacity for chips at the 14nm process node, making it about two generations behind that of SMIC. "As US equipment is indispensable for advanced semiconductor R&D and production, such a restriction, once implemented, effectively allows the US government to decide how fast, or slow, SMIC's technology progress would be".
"For some time, the USA has been stretching the concept of national security and abusing national powers to take various measures on Chinese companies without any excuse". However in a statement made by SMIC at the weekend, the company emphasises its shock at the news and denies a relationship with the sector.
The company 'manufactures semiconductors and provides services exclusively for civilian and commercial end-users and end-uses, ' SMIC said in a statement filed to the Hong Kong Stock Exchange.
The company in an official statement has said, it is "open to honest and transparent communication" with Washington to resolve "potential misunderstandings".
If SMIC is placed on the USA list, the implications could be devastating, analyst Patrick Moorhead of Moor Insights & Strategy told SiliconANGLE.
In response to the widening United States crackdown, China is planning to provide broad support for so-called third-generation (3G) semiconductors in its next five-year plan to increase domestic self-sufficiency in chip manufacturing, according to people with knowledge of the matter. "It would mean the company could not proceed as an ongoing concern".
Even so, the firm is an important semiconductors provider to Chinese companies, including Huawei, while also serving global clients including Qualcomm.
Turnover of UMC shares hit 97.93 million yesterday, the biggest since Monday last week.