China's largest chipmaker SMIC says US is placing export restrictions on suppliers

The measures mean that SMIC has become the latest Chinese technology company to be targeted by the Trump administration. PHOTO: REUTERS

BEIJING (BLOOMBERG) - China's largest chipmaker said its US suppliers have been issued with letters telling them they are subject to additional export restrictions.

Semiconductor Manufacturing International Corp is evaluating the impact of the US Bureau of Industry and Security's (BIS) export restrictions, which could have "material adverse effects" on its production and operations, it said in a statement on Sunday (Oct 4), confirming reports last week of the controls.

The chipmaker has had "preliminary exchanges" with the BIS in relation to the export restrictions and will continue to actively facilitate communications with relevant US government departments.

SMIC dropped as much as 5 per cent in Hong Kong on Monday, adding to its 27 per cent slump in September - when reports the White House was considering taking action against the company first emerged.

While the US Commerce Department stopped short of placing the chipmaker on the so-called entity list, the measures mean that SMIC has become the latest Chinese technology company to be targeted by the Trump administration amid an escalation of tensions between Washington and Beijing.

Observers, however, have warned that US companies may suffer more as a result of Washington's latest move on SMIC.

China's nationalistic newspaper Global Times said on Sunday that the move signals to Chinese companies that making compromises on their part would not lead to any concessions from the United States. Also, China may react by releasing an unreliable entity list.

Beijing-based Information Consumption Alliance's director-general Xiang Ligang told Global Times that the US restrictions may push tech giant Huawei - one of SMIC's clients and another US target - to collaborate with SMIC. Together, they might achieve a breakthrough to counter the sanctions.

China's Foreign Ministry said in a briefing last Monday that it would "continue to take necessary measures to safeguard Chinese businesses' legitimate rights and interests."

Hua Hong Semiconductor, a fellow Chinese chipmaker, declined as much as 6.4 per cent in Hong Kong.

Taiwanese rival United Microelectronics Corp gained more than 1 per cent.


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