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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Lam Research Corporation    LRCX

LAM RESEARCH CORPORATION

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U.S. tightens exports to China's chipmaker SMIC, citing risk of military use

09/26/2020 | 10:57am EST

* SMIC says it has no ties with Chinese military

* Restrictions mark U.S. policy shift from earlier this year

SHANGHAI/WASHINGTON, Sept 26 (Reuters) - The United States has imposed restrictions on exports to China's biggest chip maker SMIC after concluding there is an "unacceptable risk" equipment supplied to it could be used for military purposes.

Suppliers of certain equipment to Semiconductor Manufacturing International Corporation will now have to apply for individual export licenses, according to a letter from the Commerce Department dated Friday and seen by Reuters.

The latest move marks a shift in U.S. policy from earlier this year, when applicants seeking “military end user” licenses to sell to SMIC were told by the Commerce Department that the licenses weren't necessary, according to three people familiar with the matter.

SMIC said it had not received any official notice of the restrictions and said it has no ties with the Chinese military.

"SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses," SMIC said.

"The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses."

SMIC is the latest leading Chinese technology company to face U.S. trade restrictions related to national security issues or U.S. foreign policy efforts. Telecoms giant Huawei Technologies had its access to high-end chips curtailed by its addition to a Commerce Department blacklist known as the entity list.

"There's been a lot of coverage on the Trump administration's actions regarding TikTok, but the more significant action - from a global economic standpoint and that will have considerable ripple effects through global supply chains - are the increasing restrictions on SMIC and other Chinese national champions like Huawei," said Nicholas Klein, a Washington lawyer who specializes in international trade. He said these actions are more likely to draw a retaliatory response from Beijing.

The United States has moved to ban the popular short video app TikTok, citing national security concerns stemming from its Chinese ownership.

SMIC's new designation is not as severe as being blacklisted, which makes it difficult to get any export license approved.

The Pentagon earlier this month, Reuters was first to report, said it was working with other agencies to determine whether to blacklist SMIC for its purported links to the Chinese military.

U.S. companies including Lam Research, KLA Corp and Applied Materials, which supply chipmaking equipment, may now need to get licenses to ship certain goods to SMIC.

It is unclear which suppliers received the letter, but typically once the Commerce Department comes to the conclusion that there is a risk of military use or diversion, it sends that information to the companies.

The Commerce Department's Bureau of Industry and Security declined on Saturday to comment specifically on SMIC, but said it was "constantly monitoring and assessing any potential threats to U.S. national security and foreign policy interests".

The administration has increasingly trained its focus on Chinese companies that bolster Beijing's military. Last month, the United States blacklisted 24 Chinese companies and targeted people it said were part of construction and military actions in the South China Sea, its first such sanctions against Beijing over the disputed strategic waterway. (Reporting by Josh Horwitz, Karen Freifeld and Alexandra Alper; Writing by Douglas Busvine; Editing by Chris Sanders and Grant McCool)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
APPLIED MATERIALS, INC. -0.22% 82.48 Delayed Quote.35.42%
KLA CORPORATION -0.85% 251.97 Delayed Quote.42.63%
LAM RESEARCH CORPORATION -0.85% 452.66 Delayed Quote.54.81%
RIPPLE (XRP/BTC) 0.00% 3.4E-5 Real-time Quote.26.92%
RIPPLE (XRP/EUR) -1.09% 0.54769 Real-time Quote.175.82%
SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION 0.68% 22.05 End-of-day quote.84.67%
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Sales 2021 12 936 M - -
Net income 2021 3 224 M - -
Net cash 2021 1 693 M - -
P/E ratio 2021 20,5x
Yield 2021 1,11%
Capitalization 65 187 M 65 187 M -
EV / Sales 2021 4,91x
EV / Sales 2022 4,53x
Nbr of Employees 11 700
Free-Float 49,4%
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Timothy M. Archer President, Chief Executive Officer & Director
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Douglas R. Bettinger CFO, Chief Accounting Officer & Executive VP
Richard A. Gottscho Chief Technology Officer & Executive VP
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