US Blacklists Chipmaker SMIC, Drone Company DJI Among Other Chinese Firms

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The USA added dozens of Chinese language corporations, together with the nation’s prime chipmaker SMIC and Chinese language drone producer SZ DJI Expertise, to a commerce blacklist on Friday as US President Donald Trump’s administration ratchets up tensions with China in his last weeks in workplace.

Reuters first reported the addition of SMIC and different corporations earlier on Friday. The transfer is seen as the newest in Republican Trump’s efforts to burnish his tough-on-China picture as a part of prolonged combat between Washington and Beijing over commerce and quite a few financial points.

The US Commerce Division mentioned the motion in opposition to SMIC stems from Beijing’s efforts to harness civilian applied sciences for army functions and proof of actions between SMIC and Chinese language army industrial corporations of concern.

The Commerce Division will “not enable superior US expertise to assist construct the army of an more and more belligerent adversary,” Secretary Wilbur Ross mentioned in an announcement.

The division additionally mentioned it was including the world’s largest drone firm DJI to the record together with AGCU Scientech; China Nationwide Scientific Devices and Supplies, and Kuang-Chi Group for allegedly enabling “wide-scale human rights abuses.”

“The USA will use all countermeasures accessible, together with actions to forestall (Chinese language) corporations and establishments from exploiting US items and applied sciences for malign functions,” Secretary of State Mike Pompeo added in a separate launch.

SMIC and the opposite corporations didn’t instantly remark.

However some lawmakers, trade executives and former officers raised questions in regards to the impression of Friday’s transfer in opposition to SMIC. Typically, entity-listed corporations are required to use for licenses from the Commerce Division that face robust scrutiny after they search permission to obtain objects from US suppliers.

However SMIC will solely face a tricky assessment commonplace when it seeks licenses for extremely superior US chipmaking gear at 10 nanometers or beneath. Licenses for all different objects shipped to the corporate might be reviewed on a case-by-case foundation, the Commerce Division mentioned.

“It is a good (public relations) line: ‘We’re placing it on this unhealthy guys’ record,” mentioned William Reinsch, a former Commerce Division official, who mentioned he imagines the company was already blocking shipments of such expertise to SMIC. “As a sensible matter … it does not change something.”

Republican Congressman Michael McCaul, rating member of the Home Overseas Affairs committee echoed Reinsch’s feedback, saying he feared the foundations have been extra “bark than chunk.” “I’ve issues it undermines the intent, and should create an exception for malign actors to evade US export controls” he mentioned in an announcement.


However Chinese language authorities didn’t mince phrases about Washington’s newest gambit.

In an tackle to the Asia Society on Friday, China’s State Councillor Wang Yi, who can also be the nation’s international minister, famous the increasing record of US sanctions and known as on Washington to cease its “arbitrary suppression” of Chinese language corporations.

China’s international ministry mentioned that if true, the blacklisting could be proof of US oppression of Chinese language corporations and that Beijing would proceed to take “crucial measures” to guard their rights.

“We urge the US to stop its mistaken habits of unwarranted oppression of international corporations,” ministry spokesman Wang Wenbin instructed an everyday information convention in Beijing on Friday.

The Commerce Division launched a listing of 77 corporations and associates to the so-called entity record, together with 60 Chinese language corporations.

The designations by the Commerce Division embody some entities in China that allegedly allow human rights abuses and a few serving to it assemble and militarize synthetic islands within the South China Sea, the company mentioned.

It additionally cited entities that acquired US-origin objects to help the Chinese language army and people engaged within the theft of US commerce secrets and techniques.

Firms beforehand added to the record embody telecoms gear giants Huawei and 150 associates, and ZTE over sanction violations, in addition to surveillance digicam maker Hikvision over suppression of China’s Uighur minority.


Shares in SMIC, formally the Semiconductor Manufacturing Worldwide Company, fell 5.2 p.c in Hong Kong on Friday, whereas the corporate’s Shanghai-listed shares declined 1.eight p.c. The benchmark indices within the two markets have been down lower than 1 p.c.

SMIC had already been in Washington’s crosshairs.

In September, the Commerce Division mandated that suppliers of sure gear to the corporate apply for export licenses after concluding there was an “unacceptable danger” that gear provided to it could possibly be used for army functions.

Final month, the Protection Division added the corporate to a separate blacklist of alleged Chinese language army corporations, successfully banning US buyers from shopping for its shares beginning late subsequent yr.

SMIC has repeatedly mentioned that it has no relationship with the Chinese language army.

SMIC is the most important Chinese language chip producer however trails Taiwan Semiconductor Manufacturing Firm, the trade’s market chief. It has sought to construct out foundries for the manufacture of pc chips that may compete with these of TSMC.

Ties between Washington and Beijing have grown more and more antagonistic over the previous yr because the world’s prime two economies sparred over Beijing’s dealing with of the coronavirus outbreak, imposition of a nationwide safety regulation in Hong Kong and rising tensions within the South China Sea.

© Thomson Reuters 2020

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