Trump Cuts Off China's Top Chipmaker

In the final throws of its presidency, the Trump Administration isn’t backing down on its tech war with China. The Wall Street Journal reported today that the U.S. Commerce Department banned the export of U.S. intellectual property related to semiconductor manufacturing over Semiconductor Manufacturing International Corp’s (SMIC) alleged ties to the Chinese military. In the final throws of its presidency, the Trump Administration isn’t backing down on its tech war with China. The Wall Street Journal reported today that the U.S. Commerce Department banned the export of U.S. intellectual property related to semiconductor manufacturing over Semiconductor Manufacturing International Corp’s (SMIC) alleged ties to the Chinese military. “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,” Commerce Secretary Wilbur Ross told The Wall Street Journal in a statement. The outright ban comes months after the Commerce Department announced it would require all non-U.S. chipmakers using American equipment, intellectual property, or design software to apply for a license to sell chips to Chinese chipmakers like Huawei and SMIC. According to The Wall Street Journal report, SMIC along with more than 60 other Chinese companies will be added to the entity list. The list — effectively a black mark — restricts companies from exporting U.S. technologies to listed organizations without a license. However, where SMIC is concerned the Commerce Department has taken the extra step of adding a provision effectively baring the company from acquiring the technology required to produce 10-nanometer and smaller chips. The Trump administrations efforts to deny Chinese companies access to U.S. semiconductor technologies goes beyond export bans. This spring, the administration began courting Intel — formerly the largest U.S. chipmaker — and Taiwan Semiconductor Manufacturer Co. (TSMC) about building chip fabs in the U.S. While Intel has expressed interest, the company has yet to commit to moving its fabs to the U.S. TSMC, on the other hand, tossed the Trump administration a $12 billion bone in May, announcing plans to build a small fabrication facility in an undisclosed location in Arizona. The facility is expected to produce 20,000 silicon wafers per month using TSMC’s 5-nanometer manufacturing process, and will employ more than 1,600 people. According to an earlier report from The Wall Street Journal, these efforts are largely fueled by the administrations’ concerns over the U.S. reliance on Taiwan, which while self-governing is embroiled in a decades-long territorial dispute with China that claims sovereignty over the island nation. Since then, U.S. lobbyist group Semiconductor Industry Association has proposed $37 billion in subsidies to support the construction of domestic chip fabs, research funding, and aid for states seeking to woo manufacturers.