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US blacklists top Chinese chipmaker SMIC

December 18, 2020

The US Commerce Department has said it wants to keep US technology from being used for "malign" purposes, and accuses the listed Chinese companies of complicity in human rights abuses.

SMIC under the looking glass
Top Chinese chipmaker, SMIC, is now barred from accessing US nanotechnologyImage: Wang Jianfeng/Costfoto/picture alliance

The US Department of Commerce imposed export controls on more than 60 Chinese companies Friday, including China's top chipmaker SMIC, and drone manufacturer DJI.

Companies on this "entity list" are severely limited from doing business with US firms.

US Secretary of Commerce Wilbur Ross said the list was expanded on Friday to include Chinese companies the US says are complicit in human rights abuses, a Chinese military build-up in the South China Sea and the theft of US intellectual property.

"China's corrupt and bullying behavior … harms US national security interests, undermines the sovereignty of our allies and partners, and violates the human rights and dignity of ethnic and religious minority groups," Ross said in a statement, adding that his agency would not allow US technology to be used for "malign or abusive purposes."

China's 'military-civil fusion'

The commerce department accuses China's largest chipmaker, SMIC, of participating in China's "doctrine of military-civil fusion," based on "evidence of activities between SMIC and entities of concern in the Chinese military industrial complex."

China responds to semiconductor sector threat

The blacklisting prevents SMIC from accessing technology to produce semiconductors at the advanced level of 10 nanometers or smaller. These kinds of semiconductors can be used in guided missiles.

US companies must also apply for a license before exporting to SMIC.

“We will not allow advanced US technology to help build the military of an increasingly belligerent adversary," Ross said.

Workers make Chinese semiconductors
A Semiconductor Manufacturing International Corporation (SMIC) plant in BeijingImage: picture-alliance/dpa/Jhphoto

Drones and human rights abuse

Chinese drone manufacturer DJI was also blacklisted "because of its complicity in human rights violations within China," a commerce department official told reporters.

A statement from Ross added that China uses "ubiquitous surveillance to repress its citizens in Xinjiang and elsewhere," and companies added to the entity list support the "Chinese Communist Party's despicable offensive against vulnerable ethnic minorities."

DJI is the world's largest civilian drone producer, holding around 70% of the global drone market.

A DJI Inspire 1 drone flying over a field Sandersdorf-Brehna in eastern Germany. Photo taken June 29, 2018.
DJI drones dominate the civilian market; this one is in service on a farm in eastern GermanyImage: picture-alliance/dpa/J. Woitas

In January 2020, the US Department of the Interior grounded its fleet of DJI drones, citing security concerns over Chinese technology.

Blacklist 'arbitrary' says China

Chinese Foreign Minister Wang Yi told the Asia Society Friday that the expanded blacklist amounted to "arbitrary suppression" of Chinese companies.

China's Foreign Ministry also said the blacklisting amounted to US oppression of Chinese companies, and Beijing would take "necessary measures" to protect firms.

The move comes as the Trump administration winds down its last month in office, and President Trump seeks to further ingrain a hard stance on China into US foreign policy.

President-elect Joe Biden has said he would not immediately alter Trump's trade policies upon taking office in January.

Tensions rise between USA and China: Is it a new Cold War?

wmr/msh (Reuters, AFP)