Report: US expects Chinese firms to uphold Russian tech sanctions

Report: US expects Chinese firms to uphold Russian tech sanctions
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US officials expect China’s technology suppliers – such as chip foundry SMIC and computer giant Lenovo – to uphold sanctions against supplying goods to Russia, according to a Bloomberg report. The report said the US government would press major Chinese companies to comply with the measures despite the fact that…
By Peter Clarke

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US officials expect China’s technology suppliers – such as chip foundry SMIC and computer giant Lenovo – to uphold sanctions against supplying goods to Russia, according to a Bloomberg report.

The report said the US government would press major Chinese companies to comply with the measures despite the fact that the Chinese government officials have spoken out against them.

Bloomberg cited a US official saying that any items with US technology inside, including having been designed with US EDA software, are subject to the export regulations even if the components or products are made abroad. Any companies that evade the controls could find themselves cut-off from US-origin technology and the executives at risk of imprisonment, Bloomberg reported.

However, Chinese Foreign Ministry spokesperson, Wang Wenbin said on Monday that China opposed the use of sanctions to solve problems and would continue to carry out normal trade cooperation with Russia. He added that nations, “should not harm the legitimate rights and interests of the Chinese side.”

Why would SMIC comply?

Despite this US officials feel companies such as Semiconductor Manufacturing International Corp. (SMIC) may curtail the trade of sensitive technology in the hope of maintaining access to US manufacturing equipment, Bloomberg said

SMIC is already on a US Department of Commerce entity list that was primarily aimed at hobbling telecommunications giant Huawei. SMIC has been effectively prevented from moving to the leading-edge of chip manufacturing where it could have replaced TSMC as a source of chips for Huawei. This was done by denying SMIC access to extreme ultraviolet lithography technology in 2019 (see China warns Netherlands over blocked ASML export).

However, SMIC continues to operate effectively behind the leading-edge using US chip making equipment. It can make many of the industrial, communications and mil-aero chips that Russian equipment companies need. SMIC enjoyed a 39 percent increase in revenues in 2021, despite being on the US trade blacklist. Preventing access to US spares and servicing for chipmaking equipment could harm SMIC’s ability to operate.

China is Russia’s biggest supplier of electronics. China provides Russia with one third of its semiconductor imports and half of its computers and smartphones. However, consumer electronics, such as smartphones and laptop computers for personal use are not affected by the export regulations, the report added.

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