[Hardware] US Bans SMIC, China's Largest CPU Maker, Will It Go Bust?

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The Trump Administration has decided to put a veto on China's largest processor manufacturer, SMIC, which prohibits US companies from entering US companies' trade and technology deals with the Chinese smelter. What does this mean and how does it affect the market? Does the Chinese manufacturer have a future or will it disappear?

SMIC is currently the largest semiconductor foundry on Chinese soil, it does not have the same production capacity as industry giants such as TSMC, Intel, Global Foundries, UMC, Samsung and many others. What's more, many Chinese companies do not manufacture their processors at SMICs but rather at foundries with higher production capacity or with much newer manufacturing technologies.

Huawei, the cause of the US veto to SMIC
SMIC veto Huawei Due to the political maneuvering of the Trump administration, Huawei was completely out of being able to manufacture its chips in TSMC so they had to look for an alternative, the only viable SMIC being, and it is precisely the commercial and technological relationship between Huawei and SMIC the one that has led to the veto.

Huawei's plan? To use SMIC's 14nm node not only to manufacture the chips designed under its HiSilicon brand, but also to manufacture the 5G radios, whose design comes from Qualcomm. The problem is that in order for any chip to be manufactured, "blueprints" are needed and with the US veto of SMIC then they cannot manufacture any technology owned by a US company.

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Taking into account that Huawei is a Chinese company, this may sound surprising, but it must be taken into account that what they need is to be able to manufacture 5G radio for their smartphones since without it then their terminals cannot connect to the network or make calls. . What happens is that this technology is owned by an American company: Qualcomm.

The origin of the US-Huawei brawl? It started at the end of 2018, when Huawei's CFO was arrested in the US on the grounds that the Chinese company had violated sanctions on Iran. Since then the situation has escalated more and more until reaching the point of an exaggerated boycott that has affected the entire semiconductor industry and Huawei has become the plagued one, causing all those who make technological or commercial agreements with them to end up being banned.

Will SMIC go bankrupt?
SMIC

The thing is not only reduced to the license of 5G radios, but there is another problem related to the veto that nobody talks about at the moment. It should be borne in mind that the ownership of ARM has passed from the hands of the Japanese Softbank, over which the US administration has no political authority, to the Californian NVIDIA.

So the veto could also include a ban on SMIC from using ARM technology, which would be the final blow not only on Huawei but also on SMIC. Since they had planned to jointly build processors for PCs based on ARM, with the goal of Huawei to reposition its HiSilicon division.