Potential US ban on SMIC could choke China's semiconductor supply chain

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www.spglobal.com, Sept. 22, 2020 – 

A potential U.S. ban on Semiconductor Manufacturing International Corp. could cause widespread disruption to China's semiconductor supply chain, according to analysts.

SMIC makes chips essential to devices including handsets, telecom base stations and tablets. The company relies on U.S. equipment and software to perform steps in the chip production process such as printing circuits and inspecting the product, the analysts said. The Trump administration is reportedly considering adding SMIC to its trade blacklist.

A ban would call into question SMIC's ability to manufacture chips using high-end techniques, Mark Li, senior research analyst at Sanford C. Bernstein & Co. LLC, said.

Chinese foundries including SMIC still depend on U.S. suppliers for the equipment needed to manufacture semiconductors smaller than 90 nanometers, or nm, according to Joanne Chiao, a semiconductor analyst at TrendForce. A nanometer – one billionth of a meter – is the unit of measurement for transistors on chips. The latest generation of smartphones contains 7-nm transistors.

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