US trade restrictions on SMIC may set back China's efforts to develop a domestic alternative to Samsung and TSMC

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www.businessinsider.com, Sept. 29, 2020 – 

• The US Commerce Department issued export restrictions against SMIC.
• These restrictions will set back China's search for domestic alternatives to Samsung and TSMC and limit Chinese tech companies' ability to compete in foreign markets.

The US Commerce Department issued an order requiring US companies to obtain a license to export products to SMIC, according to Reuters. The Department alleges that SMIC could be supplying components to China's military; however, representatives of SMIC deny this, claiming that the company only manufactures semiconductors for civilian and commercial end-users.

The export restrictions will make it particularly difficult for SMIC to obtain foundry equipment, setting back China's efforts to develop a domestic alternative to Samsung and TSMC. Samsung and TSMC currently operate the only foundries in the world capable of manufacturing 7nm chips. The 7nm measurement refers to manufacturing precision, and moving from the 10nm standard to the 7nm standard unlocks considerable computing power across several hardware segments including smartphones, cloud computing components, and telecom equipment.

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