SMIC still negatively impacted by entity list placement
In December, SMIC itself was placed on the entity list by the Trump administration. This means that in order to obtain some American made technology, the company will need to receive a license first. But here’s the rub. Chips made using the 10nm process node or lower will face a presumption of denial from the Commerce Department. SMIC hopes to eventually roll 10nm and 7nm chips off of its assembly line and its placement on the entity list is going to make it harder for them to do so. And if you’re asking why did the U.S. government do this, the Commerce Department responded at the time that it was necessary “to prevent such key enabling technology from supporting China’s military-civil fusion efforts.”
Former Commerce Secretary Wilbur Ross made this statement when announcing the entity list inclusion for SMIC. “We will not allow advanced U.S. technology to help build the military of an increasingly belligerent adversary. Between SMIC’s relationships of concern with the military industrial complex, China’s aggressive application of military civil fusion mandates and state-directed subsidies, SMIC perfectly illustrates the risks of China’s leverage of U.S. technology to support its military modernization. Entity List restrictions are a necessary measure to ensure that China, through its national champion SMIC, is not able to leverage U.S. technologies to enable indigenous advanced technology levels to support its destabilizing military activities.”