The letter stated the licensing routine will remain in location “pending the U.S. federal government’s evaluation of SMIC and its subsidiaries.”
The Pentagon previously this month stated the Trump administration was thinking about including SMIC to the Entity List, a trade blacklist that would obstruct U.S. innovation sales unless business get a license.
The Commerce Department “has actually figured out that exports to SMIC or its subsidiaries, consisting of those noted above, might position an undesirable danger of diversion to a military end usage in individuals’s Republic of China pending the U.S. federal government’s evaluation of SMIC and its subsidiaries,” stated the letter, which was reported previously by the Financial Times and the Wall Street Journal.
SMIC and other chip producers depend upon U.S. software application and chip-making equipment to produce semiconductors.
The Commerce Department decreased to discuss the letter however stated it is “continuously keeping an eye on and evaluating any possible risks to U.S. nationwide security and diplomacy interests” and “will take proper action as called for.”
Zoe Zheng, a spokesperson for SMIC, stated the business has “no relationship with the Chinese armed force and does not make for any military end-users or end-uses.”
A report last month by SOS International, a defense professional in Reston, Va., stated that SMIC has a range of ties to China’s defense sector, consisting of a continuous relationship with CETC, a state-owned designer of military electronic devices.
SMIC has actually assisted CETC test brand-new production innovations and has actually utilized CETC innovations in its own production, according to the report. SOS likewise stated Chinese military scientists have actually divulged in research study documents utilizing SMIC innovation to make chips.
Limiting U.S. tech exports has actually ended up being a preferred Trump administration tool to counter China’s increase as an innovation and military power and to penalize Chinese entities for supposed human rights abuses.
The Entity List, supervised by the Commerce Department, now consists of more than 300 Chinese business. The Trump administration has actually formerly utilized it versus Chinese telecom business Huawei, companies participated in declared human rights infractions in China’s Xinjiang area and most just recently versus Chinese entities presumably associated with structure islands in the South China Sea.
Established in 2000 in Shanghai, SMIC ranks amongst the leading 5 semiconductor producers worldwide, according to a report from the United States International Trade Commission, or USITC.
Market specialists state that SMIC’s innovation drags that of chip producers in Taiwan and the United States however that Beijing is putting billions into the market to assist SMIC and other Chinese business capture up.
SMIC has actually delighted in generous federal government financial backing, consisting of low-interest loans, tax breaks and financial investments to assist construct producing centers, the Company for Economic Cooperation and Advancement in Paris stated in a report in 2015.
SMIC began as a personal business, however state financial investment has actually grown gradually, and the state owned more than 45 percent of SMIC stock since 2018, according to the OECD report.