A senior US official has suggested that Chinese chipmaker Semiconductor Manufacturing International Corp. (SMIC) may have violated American law if it produced a processor for the sanctioned telecom giant Huawei Technologies Co., according to recent statements. Under Secretary of Commerce for Industry and Security Alan Estevez, while testifying before lawmakers, acknowledged the potential breach when questioned about SMIC’s involvement in manufacturing a 7-nanometer processor for Huawei.
The revelation led to a notable decline in SMIC’s shares, indicating investor concerns over potential legal implications. Estevez refrained from disclosing details of any ongoing investigations but expressed shared concerns regarding the matter.
Estevez also highlighted SMIC’s manufacturing process, labeling it as “low-yield,” echoing previous remarks from Commerce officials questioning China’s capability to produce advanced chips at scale and with consistent performance levels.
The Bureau of Industry and Security, headed by Estevez, oversees chip export controls and sanctions, aiming to hinder China’s semiconductor ambitions. President Joe Biden’s administration has implemented stringent restrictions on Chinese companies’ access to advanced chips and chipmaking equipment from American firms, garnering support from key allies such as the Netherlands and Japan.
Despite these efforts, Huawei managed to introduce an advanced 7-nanometer chip in a smartphone, manufactured by SMIC but reliant on technology from various international companies. American officials are actively pushing for tighter chip controls among allies to prevent the flow of critical technology to China.
Republican lawmakers have urged the Biden administration to sever ties between Huawei, SMIC, and their American suppliers, highlighting concerns over national security risks.