The US government is preparing to place dozens of Chinese companies on a trade blacklist including Semiconductor Manufacturing International Corp, because of national security concerns. The Commerce Secretary Wilbur Ross said the department will add around 80 companies to the so-called entity list for national defense issues. The firms will join the likes of Huawei on a list that denies them access to US technology. Ross said there are around 700 companies on the list and 296 of which are Chinese and 150 of which are related to Huawei. Point to be noted that SMIC will also be explicitly prohibited from acquiring technology to build chips with 10-nanometer circuits and smaller. SMIC is the largest Chinese chip manufacturer and is a supplier to tech companies including Qualcomm and Broadcomm.
Ross said, “What this is all about is these are companies that are tied to the People’s Liberation Army. This has to do with is their access to very advanced semiconductor products”. He said the blacklist was essential to ensure that China is not able to leverage US technologies to enable indigenous advanced technology levels to support its destabilizing military activities. The Chinese Foreign Ministry spokesman Wang Wenbin also condemned the move during a briefing in Beijing on Friday. He said, “We urge the U.S. to stop its wrongful activities cracking down on foreign companies”. The move is the latest effort by the Trump administration to crack down on Chinese tech companies, including SMIC. The Commerce Department placed SMIC on a separate export restrictions list in September.
The Commerce Department said it had conducted a review and determined that the firm may pose an unacceptable risk of diversion to military end-use in the People’s Republic of China. The decision to add 60 Chinese companies to the entity-list could inflame tensions between the world’s two largest economies just a few weeks before President-elect Joe Biden prepares to assume office. It isn’t clear how Biden intends to handle Beijing. It is noteworthy that US relations with China deteriorated under Trump. He made it a campaign priority to shrink the trade disparities between the US and its allies. Biden said he needs to conduct a full review of the existing agreement with China before making any decisions and consult with America’s traditional Asian and European allies to develop a coherent strategy.