Rethinking economic sanctions against China

Editor's note: Were the economic sanctions against China designed in such a way that those who planned these sanctions knew China's Huawei would be able to advanced its technology? The same appears to be true of sanctions against Russia.
_______

Source: Bloomberg

How Huawei's Chipmaker Turned US Sanctions into a China Success Story

• SMIC helped to make 7nm chips despite harsh US controls

• Breakthrough catalyzes boiling tension between US and China

By Bloomberg News | November 22, 2023

HUAWEI Technologies alarmed politicians from Washington to Tokyo when it took the wraps off a US$900 smartphone that signaled China's rapid advance in semiconductor technology. The episode also thrust the little-known company that made the chip for Huawei into the middle of the US-Chinese battle for geopolitical supremacy.

Semiconductor Manufacturing International Corp has emerged as Beijing's secret weapon in breaking through a US-organised blockade aimed at containing China's technological progress, despite years of American sanctions.

Its success in delivering an advanced, 7-nanometer processor to Huawei set off jubilant celebration at home, and triggered partisan finger-pointing in Washington over the apparent failure.

The accomplishments of SMIC, as the Shanghai company is known, are all the more surprising because it's been hit by US restrictions for more than a decade and was formally blacklisted in 2020.

The Commerce Department is supposed to wield broad control over the company's purchases of any equipment or software with American inputs, but the agency continued to issue licenses to SMIC suppliers in at least certain cases. US lawmakers and industry experts are now calling for the Biden administration to crack down further, even at the risk of fraying US-China tensions.

"Once this comes to light, there's not much they can do but get much tougher on SMIC," said Douglas Fuller, associate professor at the Copenhagen Business School. "If they don't get tougher on SMIC, then this policy doesn't make any sense."

The US government has said its chip strategy is not aimed at China's smartphones, but rather its military capabilities. Semiconductors are at the foundation of the tech industry, enabling everything from artificial intelligence models and cloud computing to drones, tanks and missiles.

SMIC and the Commerce Department declined to comment for this story.

Please go to Bloomberg to read more.

________

Related:

Just in case China calls THIS a new pandemic