The U.S. Department of Commerce announced on September 12 that it would include 32 entities on the list of export controlled entities, including 23 Chinese companies specializing in purchasing U.S. chip manufacturing equipment for SMIC. This latest sanctions show that the United States is shifting from directly attacking target companies to cutting off its supply chain network, trying to further limit the development capabilities of China's semiconductor industry through a "chain break" strategy.

GMC Semiconductor Technology (Wuxi) Co., Ltd. and Jimura Semiconductor Technology Co., Ltd. were blacklisted for purchasing equipment from SMIC Northern Integrated Circuit Manufacturing (Beijing) Co., Ltd. This move highlights the new characteristics of the US sanctions strategy: not only directly sanction target companies, but also cut off all possible channels for them to obtain key technologies and equipment.

Accurate strikes on supply chain sanctions

The core target of this sanction remains to SMIC, China's largest chip maker has been facing the severe impact of the US technology blockade since it was listed on the entity list in December 2020. However, the latest sanctions show that the United States found that sanctions alone were not enough to completely block its access to advanced equipment, and some intermediaries were still helping it acquire U.S. technology.

The sanctions of GMC semiconductor technology and Yoshimura semiconductor technology reflect the escalation of the US technology sanctions strategy against China. This "supply chain sanction" aims to establish a multi-level technology blockade network to ensure that target companies cannot obtain key technologies and equipment through any means. The U.S. Department of Commerce clearly stated in its announcement that the two companies violated U.S. national security and foreign policy interests by "procurement of SMIC equipment."

It is worth noting that among the 32 entities included in the entity list this time, in addition to Chinese companies, they also include entities from countries and regions such as Japan, South Korea, and Singapore, indicating that the United States is building a more comprehensive multilateral technology blockade network. This approach is not only aimed at Chinese companies, but also deters third-country companies that provide services to Chinese companies.

As a benchmark enterprise in China's semiconductor manufacturing industry, SMIC has strong strength in 14nm and above process processes, and is a key force for China to achieve independent and controllable semiconductors. The continued sanctions by the United States on its supply chain partners are actually trying to fundamentally block the technological progress path of China's semiconductor industry.

A new stage of Sino-US technological game

This sanctions action occurred during the sensitive period of the escalation of the technological game between China and the United States. On September 13, the Ministry of Commerce of China announced an anti-discrimination investigation into the relevant measures of the United States in the field of integrated circuits in China. This is the first time that China has used relevant provisions of the Foreign Trade Act to carry out systematic legal countermeasures against US technology sanctions. The confrontation between the two countries in the semiconductor field has evolved from a simple trade dispute to an all-round competition involving laws, technology and supply chains.

The US sanctions strategy is becoming more systematic and refined. From the initial tariff measures to direct sanctions on key enterprises, to the current supply chain network crackdown, the United States is building a progressive technological blockade system. This strategy is not only aimed at leading Chinese companies, but also cut off all connections between these companies and the global supply chain.

However, this escalating sanctions strategy also brings new problems. On the one hand, it may promote China to accelerate the development of an independent and controllable semiconductor industry chain, which will help China get rid of its dependence on US technology in the long run; on the other hand, excessive supply chain controls may also affect the normal operation of the global semiconductor industry, causing losses to global suppliers, including American companies.

China's countermeasures are also constantly escalating. In addition to launching an anti-discrimination investigation, China also launched an anti-dumping investigation on relevant US analog chips in July and considered taking trade relief measures for more US semiconductor products. This tit-for-tat approach shows that the game between China and the United States in the semiconductor field has entered a new stage of mutual sanctions.

Deep changes in the global semiconductor landscape

The US sanctions on SMIC's supply chain partners reflect profound changes in the global semiconductor industry structure. The traditional globalized division of labor system is being reshaped by geopolitical considerations, and technological security has become the core concern of various countries' industrial policies.

This blow is undoubtedly a serious blow to the sanctioned Chinese companies. Without support from U.S. technology and equipment, these companies will face pressure to adjust their business and reselection of their technology paths. But at the same time, this may also promote China's semiconductor industry to accelerate the pace of independent innovation and achieve greater breakthroughs in key technology fields.

From a global perspective, the United States' sanctions strategy is promoting the world to form two relatively independent semiconductor industry systems. On the one hand, it is a "trusted" supply chain with the United States as its core, including allied countries; on the other hand, it is a Chinese-centered industrial system that seeks an independent and controllable industrial system. This differentiation will not only affect the efficiency of technological development, but will also reshape the competitive landscape of the global semiconductor industry.

For international semiconductor companies, how to find a balance point in the Sino-US technological game, not only comply with the US export control laws, but also maintain their business in the Chinese market, has become a complex strategic choice issue. Many businesses are forced to make a difficult trade-off between technical compliance and business interests.

The US sanctions on GMC semiconductor technology and Yoshimura semiconductor technology have marked a more intense stage in the technological competition between China and the United States. Although this supply chain-style precise strike strategy will have an impact on China's semiconductor industry in the short term, it may give birth to a more independent and resilient industrial system in the long run. In this war without gunpowder, the final outcome will depend on which side can gain greater advantages in technological innovation, industrial integration and international cooperation.