The US has imposed export restrictions on Semiconductor Manufacturing International Corp (SMIC, 中芯), taking aim at another prominent Chinese technology company and adding to tensions between the two countries over the critical industry.
US firms must now apply for a license to export certain products to China’s largest chipmaker, the US Department of Commerce said in a letter dated Friday, reviewed by Bloomberg News.
SMIC and its subsidiaries present “an unacceptable risk of diversion to a military end use,” the department’s Bureau of Industry and Security wrote.
SMIC has not been put on the so-called US entity list, which means the restrictions are not yet as severe as those imposed on Huawei Technologies Co (華為).
The US has reportedly said it was mulling the more severe blacklisting, which would affect exports from a broader set of companies.
“The military end-use rules only apply to a subset of listed US origin items. The entity list rules apply to all US origin and some foreign-origin items,” said Kevin Wolf, an export control lawyer at Akin Gump and senior department official in the administration of former US president Barack Obama.
The SMIC decision was a compromise between the US departments of defense and commerce, and moderates in the administration of US President Donald Trump, according to one person familiar with the negotiations.
SMIC has not received an official notice of the sanctions, has no relationship with the Chinese armed forces and does not manufacture goods for any military end-users or uses, the Shanghai-based company said in an e-mailed statement.
The commerce department would not immediately confirm the contents of the letter.
The Financial Times reported on the letter earlier.
Still, restrictions against SMIC mark further escalation in the rising tensions between the world’s two most powerful countries.
The US and China have clashed over trade, intellectual property, the COVID-19 pandemic and national security, including the onerous new National Security Law in Hong Kong.
The field of technology has become increasingly contentious as China takes aim at leading the world in certain sectors long dominated by the US.
The US blacklisted Huawei, preventing the giant telecommunications provider from buying components from US suppliers and pressured allies to follow suit.
As much as half of SMIC’s equipment comes from the US, Jefferies Group LLC estimated, and the company has a market value of more than US$29 billion.
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