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 0981.HK will now have to apply for individual export licenses, according to a letter from the Commerce Department dated Friday.
SMIC's Shanghai headquarters
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 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 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.
SMIC's Shanghai headquarters
