US to Impose Restrictions on Chinese Owned SMIC?
15-09-2020 | By Robin Mitchell
In the continuing technology war between the US and China, the US is considering imposing restrictions on one of Chinas largest IC manufactures, SMIC. Who is SMIC, what do they do, and why is the US considering imposing restrictions?
Who is SMIC?
SMIC, an acronym for Semiconductor Manufacturing International Corporation, is a Chinese semiconductor manufacturer that is partly owned by the Chinese state and is the largest in China. With its headquarters in Shanghai, it has offices around the globe, including the US, Japan, Italy, and Taiwan, and has over 18,000 employees globally.
What does SMIC do?
SMIC, being a semiconductor manufacturer, produce integrated circuits for businesses that do not produce their own designs, including AMD, Huawei, and Qualcomm. The feature sizes capable by SMIC include both 14nm and 8mn equivalent called N+1. Wafer capabilities of SMIC include both 300mm and 200mm, with various manufacturing plants across China including Shanghai, Beijing, Tianjin, and Shenzhen.
US vs. China, a technological war
In recent years, tensions have increased between the US and China fuelled by emerging technologies such as AI and high-end silicon devices. Chinas strong manufacturing market and low labour costs has seen most companies rely on China for production of products. While this is not generally an issue for consumer goods, those that are used in potentially sensitive areas have reported patent violations (i.e. theft of intellectual property), and attempts to integrate spying chips to provide remote access. Despite the People’s Republic of China not claiming responsibility, piling evidence suggests that it is powers in government and the military that are engaging in such actions.
For the past two decades, Chinese manufacturing has been instrumental in public infrastructure and technology, but these recent events are now seeing a global backlash against Chinese produced goods. One example is the banning of Huawei equipment in 5G networks; if such networks include backdoor devices, then they are vulnerable to attack and data theft.
Worried about data theft, the West is also looking into banning software platforms including TikTok, as there are growing fears that such software could give the Chinese government direct access to mobile devices, and the private data stored on those. While most countries globally engage in espionage and spying, what makes China a particular concern for the West is that by law, Chinese companies must obey commands from the government including access to all data upon request. This means that, despite a Chinese company having no interest in spying, can quickly become a powerful tool for the Chinese government.
US considers imposing restrictions on SMIC
The tension between the US and China has resulted in import bans, and the inability to integrate Chinese technology into infrastructure, but the US is also considering preventing certain exports to SMIC. At first, this may seem like an unfair action as SMIC produce integrated circuits for consumers and the commercial sector. However, according to SOS International, SMIC has connections to the Chinese military, and some Chinese researchers have said that the Chinese military uses SMIC technology to produce integrated circuits.
We can determine the fears of the US around SMIC, and why it wants to prevent certain exports to it, by understanding what SMIC do, and some other bans imposed by the US in the past. SMIC produce devices in the 14nm scale, but only a few companies globally can achieve anything below 10nm. To achieve this scale, specialised photolithography systems are required, and only one company is known to produce such equipment; ASML Holdings.
If this name seems familiar to you, its because this was the company that was pressured to prevent the export of an extreme deep UV photolithography system to an unnamed Chinese company by the US. This machine is capable of producing devices with features less than 10nm, and the ability to produce such chips allows for the creation of state-of-the-art devices, including processors, DSPs, and interfaces. Since military power is directly proportional to technological advancements, such a system could put China ahead of most countries, especially considering that it can produce its own in-house military hardware with little to no outside interference.
Its is now known that SMIC owns a machine developed by AMSL Holdings, but is not clear whether the machine in question can produce 7nm devices. Instead, SMIC stated that their N+1 technology produces devices equivalent to that of the Samsung 8nm scale. This puts SMIC at one of only three companies globally that can produce less than 10nm feature devices. Thus, restricting the export of sensitive devices and equipment to China from the US may hinder Chinas ability to produce cutting edge semiconductors.
China aims to become silicon independent
After several years of trade wars, and the restriction of export licenses, China is now considering to become independent of outside silicon companies for its semiconductors. In 2019, only 16% of processors in China were produced locally, thus making it very dependent on outside trade. Instead, the Chinese government has a goal of making 70% of processors to be Chinses built by 2025, only 5 years away. If achieved, Chinas lack of outside dependence can help drive their own technological advances without being impeded by trade restrictions and moves against companies such as SMIC only increase their conviction to do so.