The US Government has imposed export sanctions on China’s leading chipmaker, Semiconductor Manufacturing International Corporation (SMIC), citing “unacceptable risk” that equipment supplied to it could be diverted for military purposes.
The latest move by the Trump administration threatens to cut off China’s biggest chipmaker from crucial US software and chip making equipment.
According to a letter from the Commerce Department, suppliers will now need to apply for individual export licenses to ship such products to SMIC.
SMIC said it has yet to receive any official notice of the restrictions, and denied allegations of any ties to the Chinese military or any other military end-users.
“SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses,” said a SMIC spokeswoman on Sunday 27 September.
The Commerce Department’s Bureau of Industry and Security, the agency responsible for export control, declined to comment specifically on SMIC, but said it was ‘constantly monitoring and assessing any potential threats to US national security and foreign policy interests’.
US-China Tech War
SMIC is the latest leading Chinese technology company to face US trade restrictions related to national security issues or US foreign policy efforts. Previously, telecoms giant Huawei had its access to high-end chips curtailed, after being added to a Commerce Department blacklist.
More recently, the Trump administration has threatened to shut down popular social media apps TikTok and WeChat in the US, citing national security concerns stemming from its Chinese ownership. Since then, both WeChat owner, Tencent, and TikTok owner, ByteDance, have announced plans to expand into Singapore to target the lucrative Southeast Asia market.
While there has been a lot of coverage on TikTok, Washington-based international trade lawyer Nicholas Klein commented: “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.”
He added that these actions are more likely to draw a retaliatory response from Beijing.
Beijing’s Ministry of Foreign Affairs has previously declared its opposition to US sanctions on Chinese companies. Last weekend, China’s Ministry of Commerce announced broad powers to curb the operations of foreign companies deemed ‘unreliable’, including companies that ‘boycott or cut off supplies’ to Chinese companies.
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