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US trade-bans on Chinese companies like ZTE and Huawei appear to be only the beginning. The US DOD (Department of Defense) confirmed that the agency is in talks as to whether or not they will add China’s Semiconductor Manufacturing International Corporation (SMIC) to the growing list of banned Chinese companies. SMIC is China’s biggest semi-conductor manufacturer, and it would suffer a critical blow if it lost all of its US-based business.
The DOD is concerned that SMIC might be helping China’s defense infrastructure. Defense contractor ‘SOS International’ recently issued a report that claimed that SMIC worked with one of the largest defense companies in china. It also claims that researchers at university associated with the Chinese military among the design teams.
SMIC, of course, rejected the allegations in a statement. The company instead insisted that its products and services are ‘solely’ for civilian use. It also claims to have ‘no relationship with the Chinese military,’ but we all know that its impossible to own a company in China without having to report directly to the Chinese communist party. SOS, however, claimed that SMIC is indeed ‘deeply embedded’ in Chinese military projects.
There are levels to this S$%!.
If and when the United States adds SMIC to the ban-list, it will escalate an already pretty tense trade war between the two countries. In a lot of cases, there are no alternatives to using American parts, so SMIC could face major difficulties in growing or even maintaining its business. That would then inhibit SMIC customers like Huawei as they run out of manufacturing options. China might, then, retaliate by hurting US companies that depend on Chinese manufacturing and parts.