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Semiconductor Industry: US Government Considering Sanctions against SMIC

businesskorea.co.kr, Sept. 07, 2020 – 

The media is reporting that the US government is reviewing potential sanctions against Chinese foundry SMIC. If such sanctions materialize, it would be a negative development for Chinese semiconductor companies such as SMIC, YMTC, and CXMT. Sanctions against SMIC would also be negative for semiconductor equipment players. However, sanctions would be beneficial for competitors such as TSMC and SEC.

US government reportedly considering sanctions on SMIC

On Sep 5, media outlets reported that the US government is considering sanctions against Chinese foundry SMIC due to concerns over the relationship between SMIC and the Chinese military. Should SMIC become subject to sanctions, US companies would need to obtain prior approval from the US government when doing business with SMIC.

SMIC is the world's fifth-largest foundry player and the only company in China capable of mass production below 14nm. In June, due to sanctions against Huawei by the US government, transactions between Huawei and TSMC were cut off. Through this development, SMIC has emerged as the largest beneficiary. The Chinese government is strengthening support for SMIC in order to beef up the firm's microprocessing capabilities, which are currently lagging behind those of TSMC and Samsung Electronics (SEC).

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