Why Trump’s next attack on China could hurt Huawei too

A new set of US sanctions could be applied to certain Chinese entities, including the flagship of SMIC semiconductors. This would be bad news for Huawei, but also for China’s efforts to gain autonomy in processors.

Before the end of his mandate, Donald Trump shoots his final arrows at China. According to Reuters, in its November 30 edition, the US president is to add new Chinese companies to his blacklist, including the founder Semiconductor Manufacturing International Corporation (SMIC), one of the main local producers of semiconductors.

The addition of SMIC to the United States’ blacklist is not yet confirmed. It is also not indicated on what date this registration would take place. However, the blacklisting of the minimum wage would not come as a surprise in view of the policy followed for several years by the current American administration. As early as 2018, a trade war between Washington and Beijing took place.

Whether or not the minimum wage is excluded from American investments, President-elect Joe Biden will inherit an already deteriorated bilateral situation. However, it is not at all sure that the new head of state really softens this hard line, except perhaps in the forms. Mobilization in the face of the emergence of China as a superpower is proving to be one of the rare points of consensus in the United States.

Huawei, collateral victim

Indirectly, the restrictions that SMIC could undergo are likely to harm Huawei, among others. The Chinese company, whose business in smartphones recently collapsed in Western Europe because of the sanctions put in place by the American authorities, is indeed looking for a way out to re-access cutting-edge equipment in semiconductors.

However, SMIC is not at the level of the leaders in the field – it has the ability to burn chips with a fineness of 14 nanometers, where giants like Samsung, TSMC and Intel are already positioned on 5nm engraving processes and gradually unfold in the 3 nm. The gap between the top three and minimum wage amounts to several years of research and development.

Rumors that arose this fall suggest that Huawei would have made a deal with the American supplier Qualcomm, but this has not been confirmed. The agreement would relate to the model Snapdragon 875, which is engraved in 5 nm. The chip would be designed by ARM (a British company, in the process of being acquired by the American Nvidia) and produced by the South Korean Samsung.

The Huawei Mate 30 // Source: Numerama

China remains heavily dependent on semiconductors

The American efforts against the SMIC, and therefore to prevent China from acquiring, at least quickly, a cutting-edge semiconductor industry, are not recent. For exemple, The world reported this summer that the Trump administration pressured the Netherlands to prevent ASML, a local maker of semiconductor machinery, from doing business with SMIC.

As noted in July Antoine bondaz, research fellow at the Foundation for Strategic Research and specialist on China, Beijing knows “ for decades that its dependence on foreign technologies has been a vulnerability that must be addressed “. However, the decision this summer of the Taiwanese TSMC to no longer work with Huawei could be a fatal blow to the Chinese company.

The great dependence of China on semiconductors was illustrated by an eloquent comparison: the country indeed imports more semiconductors than oil, in value. If the country is working to make up for its technological backwardness and to bring out its flagships, the delay compared to the state of the art is still pronounced. And the United States obviously knows it. And play it.

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