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SMIC Has Had ‘Preliminary Exchanges’ With US Over Export Restrictions, Company Says

Chinese chipmaker Semiconductor Manufacturing International Corporation (SMIC) has undertaken “preliminary exchanges” with the US Bureau of Industry and Security regarding export restrictions, the company said on Sunday in a filing.

“The Company is conducting assessments on the relevant impact of such export restrictions on the company’s production and operation activities,” the filing to the Hong Kong Stock Exchange said.

SMIC also said it has been operating in compliance with the relevant laws and regulations of all jurisdictions where it performs its businesses.

The company also advised shareholders and potential investors “to exercise caution when dealing in the securities of the Company.”

In September, Reuters reported that the Bureau of Industry and Security under the Department of Commerce had issued letters informing certain companies they must henceforth obtain a license before continuing to supply goods and services to SMIC.

The letter stated that exports to SMIC “may pose an unacceptable risk of diversion to a military end use” to China.

Such measures recalled those imposed by the Department of Commerce on Huawei, the Shenzhen-based maker of smartphones and networking equipment.

At the time of the reports, SMIC said it had not received any notice from the Department of Commerce regarding the reported restrictions and said it had no relationship with China’s military.

SMIC is China’s largest semiconductor foundry, though it trails behind Taiwan Semiconductor Manufacturing, the global market leader.

Both companies rely heavily on equipment from companies based in the United States or US-allied countries to produce chips for clients.

Earlier this year, SMIC raised $6.6 billion (roughly Rs. 48,262 crores) in a listing in China’s tech-centric STAR Market, aiming to use the cash to kickstart manufacturing into more advanced technology.

© Thomson Reuters 2020

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