Chinese chipmaker SMIC announced today in a filing to the Hong Kong Stock Exchange that, after several days of inquiries and discussions with suppliers, it is aware that the United States has required some of its suppliers to obtain licenses before supplying to it, and is currently assessing the impact of this requirement.
The Bureau of Industry and Security (BIS) of the US Department of Commerce has sent a letter to some of its suppliers under the US Export Control Act, stating that the export of certain US equipment, parts, and raw materials to SMIC will be further restricted by the US Export Control Act, and SMIC will be required to apply for an export license before it can continue to supply them.
In response to the export restrictions, SMIC said it has had preliminary exchanges with BIS and will continue to actively communicate with the relevant US government departments.
SMIC said it is evaluating the impact of the export restriction on the company's production and operation activities.
"Based on the fact that some of the equipment, parts, and raw materials exported from the US will have extended or inaccurate lead times, it may have an important adverse impact on the company's future production operations," the company said.
SMIC reiterated that the company has always maintained compliance with the relevant laws and regulations of the places where it operates.
On September 26, Reuters reported that the US government has imposed export restrictions on SMIC because the US side believes there is a risk that equipment exported to SMIC could be used for military purposes, and that this risk is "unacceptable".
That also makes SMIC the second top Chinese tech company, after Huawei, to be hit by US trade restrictions.
SMIC said in a statement after the report that the company has received no such official information.
According to a letter sent by the US Commerce Department on Friday cited by Reuters, the US government's export restrictions include SMIC's subsidiaries and joint ventures in Shanghai, Beijing, Tianjin, Shenzhen, Ningbo, and even Italy.
Any supplier affected by the restrictions would have to apply for an export license from the US government to continue supplying SMIC.
Nikkei Asia reported on September 30 that SMIC is stocking up on production equipment and crucial replacement parts in a sign that it has been braced for months for the US to tighten export restrictions.
SMIC's purchases from American, European, and Japanese suppliers exceed the company's needs for 2020, the report cited several industry sources familiar with the matter as saying.
Purchases include machinery for key production processes such as etching, lithography, wafer cleaning, and testing, as well as more than a year's worth of consumable parts, which must be replaced on a regular basis to keep machines running and daily operations on track.
SMIC is even working with other Chinese chipmakers to create a shared reserve of such parts, the sources said, adding that a central warehouse has been set up to store these items.
