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Shares of SMIC, China’s largest contract chipmaker, plunged on Thursday after two U.S. congressmen called on the White House to further restrict export sales to the company.
The comments come after Huawei Technologies introduced the Mate 60 Pro, a Chinese smartphone powered by an advanced chip said to be manufactured by SMIC.
Last week’s launch shocked industry experts who couldn’t understand how Shanghai-headquartered SMIC would have the ability to manufacture such a chip following sweeping U.S. efforts to restrict China’s access to foreign chip technology.
TechInsights, a Canada-based research organization specializing in semiconductors, revealed soon after the launch that the smartphone contains a new 5G Kirin 9000s processor developed specifically for Huawei by SMIC.
It’s a “big technological breakthrough for China,” Jefferies analysts said in a research note on Tuesday.
This development has fueled analysts’ fears that the tech war between the United States and China is likely to accelerate in the near future.
U.S. Representative Mike Gallagher, chairman of the U.S. House of Representatives China Committee, called on the U.S. Commerce Department on Wednesday to end all technology exports to Huawei and minimum wage, according to Reuters.
Gallagher reportedly said the minimum wage could have violated US sanctions, as this chip likely could not be produced without US technology.
“Now is the time to end all US technology exports to Huawei and SMIC to make it clear that any company that flouts US law and undermines our national security will be cut off from our technology,” he said. declared.
Shares of SMIC, which stands for Semiconductor Manufacturing International Corporation, fell 8.3% in Shanghai and 7.6% in Hong Kong on Thursday. Hua Hong Semiconductor, China’s second-largest chip foundry, fell 5.8%.
Texan Republican Michael McCaul, who chairs the House Foreign Affairs Committee, was quoted by Reuters as saying he was concerned China was trying to ‘gain a monopoly’ in chipmaking less advanced computers.
“We’ve talked a lot about advanced semiconductor chips, but we also need to look at legacy,” he reportedly said, referring to older computer chip technology that falls outside export controls.
“I think China is also trying to get a monopoly on the market share of traditional semiconductor chips. And I think that’s part of the discussion we’ll have,” he said.
Chinese state media presented the development as a sign that the country had succeeded in “breaking through US sanctions” and “achieving technological independence” in manufacturing advanced chips.
Chinese internet meme creators have even crowned US Secretary of Commerce Gina Raimondo as the unofficial Mate 60 brand ambassador.
The memes poke fun at the idea that US sanctions, implemented and enforced by the US Department of Commerce, may have indirectly led to the launch of the new phone, with Chinese companies having to work with available technology.
Raimondo visited China last week when the phone was launched. The memes went viral online and were reported by state broadcaster CCTV.
Prior to Thursday, SMIC shares in Hong Kong had risen more than 20% in two weeks on investor optimism. Huahong Semiconductor jumped 11%.
CNN has contacted the offices of Gallagher and McCaul for comment, but has not yet received a response.
Huawei was blacklisted in May 2019 by the US Department of Commerce for national security reasons. This means companies must apply for US export licenses to supply technology to Huawei.
SMIC was also put on the same list in 2020 because US officials feared it could use US technology to help the Chinese military. SMIC has denied any relationship with the Chinese military.
“The fact that China has achieved a major breakthrough in (semiconductor) technology is likely to create more debate in the United States about the effectiveness of sanctions,” he said. Jefferies analysts.
They expect the Biden administration to tighten the China chip ban introduced in October 2022 in coming months, further limiting China’s access to advanced U.S. semiconductors.
“Overall, the tech war between the United States and China is likely to escalate,” they said.
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