More US Bans; China-based SMIC curbed from trade citing national security

By Rahul Vaimal, Associate Editor
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Shanghai-based chip maker Semiconductor Manufacturing International Corporation (SMIC) has been restricted from transactions with American firms by the country’s Department of Commerce. 

The move will now restrict equipment suppliers in the homeland from providing auxiliary components to China’s biggest semiconductor foundry as the US government believes that any such support could pose an “unacceptable risk” at the materials being used by the Chinese military.

Authorities have been weighing on the action for some time now as the Pentagon has been consulting other government agencies on the repercussions of blacklisting SMIC on national security grounds.

US suppliers who intend to provide components to SMIC will now have to acquire individual export licenses in deliberation with the Commerce Department.

The current stance from the body is a stark contrast of its policy from earlier this year where any applicant seeking “military end user” licenses to sell to SMIC was told that no such license was required.

The Chinese chipmaker stated that it has not received any official notification about the restrictions placed while reiterating that it holds no ties with the Chinese Military.

“SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses. The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses.”
SMIC Statement

Similar trade restrictions based on national security issues or US foreign policy efforts are not new to the sector as global telecommunication giant Huawei Technologies is currently undergoing a similar phase where it lost access to high-end chips based out the United States.

Even though the current sanctions are not as acute as blacklisting but this unusual situation makes it difficult for firms from getting any export license approved.

The Commerce Department’s Bureau of Industry and Security didn’t provide a specific reply on the matter but stated that it was “constantly monitoring and assessing any potential threats to US national security and foreign policy interests”.