SMIC is under attack from the U.S.
The difference between the military end-use rules that SMIC now has to live with and the possible Entity List rules that it might face in the future can be explained by Kevin Wolf, an export control lawyer at Akin Gump and senior Commerce Department official in the Obama administration. Wolf says, “The military end-use rules only apply to a subset of listed U.S. origin items. The Entity List rules apply to all U.S. origin and some foreign-origin items.”
According to analysts at securities firm Jefferies, the U.S. is escalating its attack on China’s semiconductor industry and more companies are bound to be included. As you might expect, the Chinese government is not pleased. Foreign Ministry spokesman Zhao Lijian accused the U.S. of “blatant bullying.” He adds that “What it has done has violated international trade rules, undermined global industrial supply and value chains and will inevitably hurt U.S. national interests and its own image. We urge the U.S. to stop over-stretching the concept of national security to oppress foreign companies.” Jefferies believes that half of SMIC’s equipment comes from the U.S. and that the company, estimated to be worth approximately $29 billion according to the securities firm, does business with major U.S. chipmakers including Qualcomm and Broadcom.
SMIC’s N + 1 process is the closest that SMIC can get to 7nm at the moment as it provides for a 20% increase in performance,a 57% increase in energy efficiency and a 55% smaller size than standard 14nm chips. As soon as next year, the foundry expects to hit the 7nm node mark three years after TSMC started to mass-produce such chips. But the U.S. has other ideas while it sets its sights on SMIC, and through SMIC, Huawei.