SMIC Threat Overview

SMIC scores as a SEVERE RISK in the November 2023 Chip Risk Monitor for investment, supply, research, and industrial policy ties to the Chinese government and military bureaucracies.

SMIC has been placed on the Department of Commerce’s Entity List and the Department of the Treasury’s Chinese Military-Industrial Complex List.


Semiconductor Manufacturing International Corporation (SMIC) is the PRC’s largest contract chip manufacturer. Headquartered in Shanghai and incorporated in the Cayman Islands, it operates 8- and 12-inch wafer fabrications sites across China —  as well as offices in the United States, Italy, Japan, and Taiwan.

While publicly listed, SMIC is partially State-owned – and its State investors have ties to the Chinese government and military. SMIC also cooperates with CCP- and State-backed entities with ties to China’s military and military-civil fusion program.

SMIC was placed on the Department of Commerce’s Entity List in 2020. However, it continues to operate profitably, including in the US. In 2022, its operating income in the United States totaled approximately 10 billion RMB (1.4 billion USD), up from 7.8 the previous year.

Objective Risks

SMIC’s largest shareholders are tied to the Chinese State, party, and military bureaucracies. SMIC also partners with and supplies PRC entities tied to the military, military-civil fusion, and government ecosystems – and that have been identified by the US government as supporting China’s military modernization.

Ownership risks

SMIC’s largest shareholders are companies and investment vehicles tied to the Chinese State, party, and military bureaucracies. Based on SMIC’s 2022 annual statement, its top shareholders are Datang Holdings, Xinxin (Hong Kong) Investment Co., Ltd, the National Integrated Circuit Investment Fund (Big Fund), a China Merchants Bank fund, and China Information and Communications Technology Group Co., Ltd.

Datang Holdings is a wholly-owned subsidiary of Datang Telecom, a major Chinese State-owned company with military ties that include providing military communications infrastructure to the People’s Liberation Army (PLA). Datang Telecom is a listed company under the centrally State-owned China Information Communication Technologies Group Corporation (CICT). CICT, itself also a SMIC shareholder, is registered in China Optics Valley – a PRC military civil fusion-tied technology project – and dedicated to the telecommunications industry and information security. Xinxin (Hong Kong) Investment Co., Ltd is a wholly-owned subsidiary of the Big Fund, a Chinese government-guided fund fueled by state-tied capital intended to provide capital for the domestic development of China’s semiconductor industry.

SMIC’s personnel underscore the company’s ties to these players. The company’s Chairman and Executive Director, Gao Yonggan, previously served as the Chairman of Datang Telecom Group Finance Co., LTd; non-executive director Lu Guoqing serves as Party Committee Secretary and Chiarman of CICT; and non-executive Director Yang Lumin is a director of the Big Fund, to cite a few examples.

Research and supply partnership risks

SMIC also has a track record of cooperating with PRC entities tied to the military, military-civil fusion, and government ecosystems – and that have bene identified by the US government as supporting the PRC”s military modernization. These include Datang Telecom, Huawei, and China Electronics Technology Group Corporation (CETC). For example:

  • In August 2023, Huawei released a new 5G phone build around a chip manufactured by SMIC. The partnership between the two companies reportedly stemmed from a March 2023 PRC government move to make Huawei and SMIC, among other Chinese companies, the core to a new government bid for self-reliance.
  • In February 2022, SMIC and Datang Holdings entered into an extended framework agreement with a three-year term, according to which they committed to SMIC supplying Datang. The annual cap for the year ending December 31, 2022 was 266 million USD. 
  • SMIC subsidiaries have helped CETC Electronics Group Co., Ltd test technologies; that company is a wholly owned subsidiary of the centrally State-owned China Electronics Technology Group Co., Ltd (CETC), which has been identified by the US Department of Defense as a Chinese military company and placed on the Entity List by the US Department of Commerce.

Industrial policy risks

SMIC’s risks are also evident in the extensive support it receives from the Chinese government – support that is intended to prop up the company as a core pillar of Beijing’s bid for self-sufficiency, and market conquest, in a strategic industry. In 2022, SMIC received approximately 1.946 billion RMB in subsidies, more than any other Chinese A-share semiconductor company by a factor of approximately two.

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