US adding dozens of Chinese firms to blacklist, including chipmaker SMIC

Washington — The US is set to add dozens of Chinese companies, including the country’s top chipmaker SMIC, to a trade blacklist on Friday, two people familiar with the matter said on Thursday.

The move, which has not previously been reported, is seen as the latest in US President Donald Trump’s effort to cement his tough-on-China legacy. It comes just weeks before Democratic president-elect Joe Biden is set to take office on January 20.

The US commerce department is expected to add about 80 additional companies and affiliates to the entity list, nearly all of them Chinese.

China’s foreign ministry said that, if true, the blacklisting would be evidence of US oppression of Chinese companies and that Beijing would continue to take “necessary measures” to protect their rights.

“We urge the US to cease its mistaken behaviour of unwarranted oppression of foreign companies,” ministry spokesperson Wang Wenbin told a regular news conference in Beijing on Friday.

SMIC and the US commerce department did not immediately respond to requests for comment.

The designations by the commerce department are expected to name some Chinese companies that Washington says have ties to the Chinese military, including some helping it construct and militarise artificial islands in the South China Sea, as well as some involved in alleged human rights violations, the sources said.

The Trump administration has often used the entity list — which now includes more than 275 China-based firms and affiliates — to hit key Chinese industries.

These include telecoms equipment giants Huawei Technologies and 150 affiliates, and ZTE over sanction violations, as well as surveillance camera maker Hikvision over suppression of China’s Uighur minority.

Fraying ties

SMIC has already been in Washington’s crosshairs. In September, the commerce department mandated that suppliers of certain equipment to the company apply for export licences after concluding there was an “unacceptable risk” that equipment supplied to it could be used for military purposes.

Last month, the US defence Department added the company to a blacklist of alleged Chinese military companies, effectively banning US investors from buying its shares starting late in 2021.

SMIC has repeatedly said it has no relationship with the Chinese military.

The entity list designation would force SMIC to seek a special licence from the US commerce department before a US supplier could send it key goods, part of a bid by the administration to curb its access to sophisticated US chipmaking technology.

The department is also expected to add numerous SMIC-affiliated companies to the entity list, the sources said.

SMIC is the largest Chinese chip manufacturer but trails Taiwan Semiconductor Manufacturing (TSMC), the industry’s market leader. It has sought to build out foundries for the manufacture of computer chips that can compete with TSMC.

Ties between Washington and Beijing have grown increasingly antagonistic over the past year as the world’s top two economies sparred over Beijing’s handling of the coronavirus outbreak, imposition of a national security law in Hong Kong and rising tensions in the South China Sea. 

Reuters