SMIC bolsters raw material procurement amid escalating fears of potential US sanction
SMIC has significantly increased its raw material procurement amid rising concerns of potential U.S. sanctions.
China’s Semiconductor Manufacturing International Corporation (SMIC) has taken a significant step by placing substantial orders for raw materials, equivalent to approximately two years’ worth of supply, from Taiwanese partners. This move comes on the heels of the recent shipment of Huawei’s HiSilicon Kirin 9000S system-on-chip for the Mate 60 smartphone, a development that raises concerns about potential violations of U.S. sanctions.
SMIC bolsters raw material procurement amid escalating fears of potential US sanction
The underlying motive driving SMIC’s substantial stockpiling efforts has become a topic of speculation within the tech community. Some experts suggest that it is a preemptive measure in anticipation of stricter U.S. sanctions, while others argue that SMIC may be preparing to meet the surging demands of its major client, Huawei. Huawei has set its sights on shipping up to 20 million units this year, with projections indicating continued strong sales well into the next year.
The imposition of U.S. sanctions on Huawei disrupted its chip supply chain, compelling the company to seek alternative solutions. This is where SMIC comes into the picture. Although it lagged behind global competitors until recently, the launch of the Huawei Mate 60 Pro, featuring the 7nm 5G-enabled Kirin 9000S chipset, marked a significant leap forward for both companies. This technological advance not only enabled 5G services in the U.S. but also showcased SMIC’s proficiency in the highly efficient 7nm node process.
SMIC’s strategic move to secure a substantial raw material inventory serves a dual purpose. Firstly, it acts as a safeguard against potential U.S. restrictions, ensuring the uninterrupted continuation of its operations. Secondly, this stockpiling effort positions SMIC to effectively meet Huawei’s escalating demands. Industry analysts believe that this forward-thinking approach aligns with SMIC’s broader efforts to aid Huawei in reclaiming a dominant position in the smartphone market.
It's worth noting that SMIC's approach mirrors that of several Chinese chipmakers, who have been actively accumulating chip-making equipment from diverse international sources, anticipating potential disruptions stemming from geopolitical tensions. This proactive stance underscores the industry's resilience and adaptability in the face of challenging global dynamics.
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