SMIC Photo: Xinhua

Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) said on Saturday that it did not receive any official notification that it had been sanctioned by the US government, reiterating that the company has no relationship with the Chinese military as the US has claimed. 

Citing a letter the US Department of Commerce sent to various companies, the Financial Times reported that the US has imposed sanctions on SMIC, claiming that exports to the Chinese firm posed an "unacceptable risk" of being diverted for "military use".

Following the move, companies must obtain export licenses before shipping crucial US software and equipment to the Chinese company, which experts say could cripple SMIC’s operations.

In a statement sent to the Global Times on Saturday, SMIC said that it has not received any official notification about the sanctions, reiterating that SMIC only provides products and services for civilian and commercial end-users. "SMIC has no relationship with the Chinese military and does not manufacture for any military users," the statement said.

If the Financial Times' report is correct, SMIC would become the latest of over 300 Chinese companies that have been sanctioned by an increasingly hostile and erratic US government and this could pose serious risks for its business, experts said.

The Trump administration is applying pressure in a desperate move to score political points ahead of the US Presidential election in November as Trump’s administration found that the crackdown on Chinese firms including Huawei, WeChat and TikTok has not generated a "big windfall," analysts said. 

"So it's more of a case of bluffing," Ma Jihua, a veteran industry analyst, told the Global Times on Saturday.

He noted that Washington's series of malicious moves against Chinese companies has sent a warning to Chinese tech firms that making compromises won’t lead to any concessions from the US side. 

"We need to have a fighting spirit and to be able to resist the blackmail, while also striving to improve our homegrown technologies. In that way, Washington will eventually realize that it will end up empty-handed or even lose more through its strategy," Ma said. 

If the restriction takes effect, it will also deal a heavy blow to US chip companies, as SMIC contributes to their revenues, analysts said, noting that many electronic products made by SMIC are sold in the US. 

Observers said that China’s highly anticipated unreliable entity list will be released soon if Washington imposes sanctions on SMIC. 

Ma predicted that Cisco— a major competitor of Huawei and SMIC – could be put onto the list. US tech firm Oracle could also be listed.
However, if SMIC is restricted as reported, most of its business will freeze as the company cooperates with US partners across all of its industrial chain. For example, SMIC buys chips for terminals from Qualcomm, according to Ma.

"Unlike Huawei, which has stockpiled chips ahead of the ban, the Chinese chipmaker has not prepared for the situation. The impact on its business could be catastrophic," Ma noted.