US sanctions China’s biggest chipmaker

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The US government has sanctioned China’s biggest chipmaker, dealing further damage to the country’s semiconductor industry after cutting Huawei off from its chip suppliers.

On Friday, the US Department of Commerce told companies that exports to Shanghai Manufacturing International Corporation (SMIC) posed an “unacceptable risk” of being diverted to “military end-use”, according to a copy of the letter seen by the Financial Times.

The move threatens to cut off China’s biggest chipmaker from crucial US software and chipmaking equipment. Companies now require licenses to export such products to SMIC.

On Saturday, SMIC said that it was continuing to engage with the US Department of Commerce. The company reiterated that it “has no relationship with the Chinese military, and does not manufacture for any military end-users or end-uses.”

SMIC, a “national champion” that is crucial to the government’s hopes of achieving chip self-sufficiency, became the country’s biggest initial public offering for a decade when it raised $7.6bn in Shanghai earlier this year.

SMIC has already been hit by the US’s tightening of sanctions on Huawei. This meant that SMIC could no longer serve its largest customer.

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