WASHINGTON (Reuters) – The United States confirmed on Friday that it will add dozens of Chinese companies, including the country’s top chipmaker SMIC and Chinese drone maker SZ DJI Technology Co Ltd, to a blacklist.
The move, first reported by Reuters, is seen as the latest step in Republican President Donald Trump’s efforts to bolster his stubborn Chinese legacy. It will only be weeks before Democratic President-elect Joe Biden takes office on January 20.
The US Department of Commerce upheld the decision early Friday, saying the action against SMIC “stems from China’s doctrine of military-civilian fusion (MCF) and evidence of activity between SMIC and entities of concern in China’s military industrial complex.”
A U.S. Department of Commerce official told reporters in a conference call that the world’s largest drone company DJI was added to the list. DJI did not immediately respond to a request for comment.
Secretary of Commerce Wilbur Ross said in a statement that the department “would not allow advanced US technology to help build the army of an increasingly belligerent opponent.”
Ross said the government would presumably deny licenses to prevent SMIC from accessing technology to produce semiconductors at advanced technology levels – 10 nanometers or less.
In a speech to the Asia Society on Friday, Chinese State Councilor Wang Yi, who is also the Secretary of State, took note of the growing list of US sanctions and called on Washington to stop “arbitrary repression” of Chinese companies .
The Ministry of Commerce said it is adding a total of 77 companies and affiliates to the so-called entity list, including 60 Chinese companies. Reuters previously reported that the division added about 80 companies, most of them Chinese.
China’s State Department said that if true, the blacklist would be evidence of US repression against Chinese companies and that Beijing would continue to take the “necessary steps” to protect their rights.
“We urge the US to stop the wrong behavior of unfounded oppression of foreign companies,” ministry spokesman Wang Wenbin told a regular news conference in Beijing on Friday.
SMIC did not immediately respond to requests for comment.
The designation by the Ministry of Commerce includes some entities in China that are enabling alleged human rights violations and some that are helping it build and militarize artificial islands in the South China Sea, the agency said.
It also cited entities that acquired items of American origin in support of the People’s Liberation Army programs, and entities and individuals involved in the theft of US trade secrets.
Companies previously added to the list include telecom equipment giants Huawei Technologies Co and 150 affiliates, and ZTE Corp for sanctions violations, as well as surveillance camera maker Hikvision on oppression of the Uyghur minority in China.
FRAYING TIRES
Shares in SMIC, formally the Semiconductor Manufacturing International Corp., fell 5.2% in Hong Kong on Friday, while the company’s Shanghai-listed shares fell 1.8%. The benchmark indices in the two markets fell by less than 1%.
SMIC was already in Washington’s crosshairs.
In September, the Department of Commerce mandated that suppliers of certain equipment apply to the company for export licenses after concluding that there was an “unacceptable risk” that the equipment supplied to the company could be used for military purposes.
Last month, the Department of Defense added the company to a blacklist of alleged Chinese military companies, effectively banning US investors from buying their shares from the end of next year.
SMIC has repeatedly stated that it has no relationship with the Chinese military.
The entity list designation would force SMIC to apply for a special license from the Department of Commerce before a US supplier could send it important goods, part of a government bid to curb its access to advanced US chip technology.
The Department of Commerce is adding nearly a dozen SMIC-affiliated companies to the entity list, Ross said.
SMIC is the largest Chinese chip manufacturer but is behind Taiwan Semiconductor Manufacturing Co, the industry leader. It has tried to build foundries to manufacture computer chips that can compete with TSMC’s.
The ties between Washington and Beijing have become increasingly antagonistic over the past year as the world’s two largest economies discussed Beijing’s handling of the coronavirus outbreak, the imposition of a national security law in Hong Kong and mounting tensions in the South. -Chinese Sea.
Reporting by David Shepardson and Alexandra Alper; Additional reporting by Humeyra Pamuk, Mike Stone, Karen Freifeld, Tom Daly Gabriel Crossley, and Tom Westbrook; Written by Humeyra Pamuk and David Shepardson; Edited by William Mallard, Steve Orlofsky and Jonathan Oatis