Troubles rise for China’s biggest chipmaker SMIC

Semiconductor Manufacturing International Corporation (SMIC), China’s top chipmaker, is under mounting pressure as reports of its CEO’s looming departure and a potential U.S. sanction concern investors.

The U.S. Commerce Department is looking to add dozens of companies, mostly Chinese and including partially state-owned SMIC, to its trade blacklist, Reuters and The Wall Street Journal reported on Friday. The move would effectively restrict SMIC from buying key components from U.S. suppliers to build advanced chipsets.

Telecoms equipment and smartphone making giant Huawei, which counts SMIC as a supplier, has been struggling with phone production after the Trump Administration added it to the trade blacklist and cut off its key chip access.

Last month, the U.S. government reportedly added SMIC to its defense blacklist, which would bar American investors from buying securities from the company.

SMIC and the Commerce Department cannot be immediately reached for comment.

The reports arrived amid SMIC’s management shakeup and what appears to be internal politics at the chipmaking firm. SMIC recently appointed Chiang Shang-Yi, formerly a co-chief operating officer at Taiwan Semiconductor Manufacturing Co (TSMC), as vice-chairman. Days later an alleged resignation letter from Liang Mong Song made rounds online, and in it, the co-chief executive of SMIC said he was unaware of Chiang’s appointment and the hiring had prompted him to quit.

SMIC subsequently issued a statement saying it is “verifying” the executive’s intention to quit, sending the company’s shares plummeting.

The fate of SMIC and TSMC is tightly linked to that of Huawei. TSMC, once an important supplier to Huawei, reportedly halted orders from the Chinese firm following new U.S. export controls. There were hopes that SMIC could be a replacement, but industry observers have long argued that the Chinese chipmaker is years behind its Taiwanese rival on making state of the art chipsets for phones.

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