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US Tightens Exports to China’s Chipmaker SMIC, Citing Risk of Military Use

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The United States has imposed restrictions on exports to China’s largest chip maker SMIC after concluding there’s an “unacceptable risk” tools provided to it might be used for army functions.

Suppliers of sure tools to Semiconductor Manufacturing International Corporation will now have to apply for particular person export licenses, in accordance to a letter from the Commerce Department dated Friday and seen by Reuters.

The newest transfer marks a shift in US coverage from earlier this yr, when candidates looking for “military end user” licences to promote to SMIC had been advised by the Commerce Department that the licenses weren’t needed, in accordance to three folks conversant in the matter.

SMIC mentioned it had not acquired any official discover of the restrictions and mentioned it has no ties with the Chinese army.

“SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses,” SMIC mentioned.

“The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses.”

SMIC is the most recent main Chinese know-how firm to face U.S. commerce restrictions associated to nationwide safety points or U.S. overseas coverage efforts. Telecoms big Huawei Technologies had its entry to high-end chips curtailed by its addition to a Commerce Department blacklist referred to as the entity record.

“There’s been a lot of coverage on the Trump administration’s actions regarding TikTok, but the more significant action – from a global economic standpoint and that will have considerable ripple effects through global supply chains – are the increasing restrictions on SMIC and other Chinese national champions like Huawei,” mentioned Nicholas Klein, a Washington lawyer who makes a speciality of worldwide commerce. He mentioned these actions are extra seemingly to draw a retaliatory response from Beijing.

The United States has moved to ban the favored brief video app TikTok, citing nationwide safety issues stemming from its Chinese possession.

SMIC’s new designation just isn’t as extreme as being blacklisted, which makes it tough to get any export license authorized.

The Pentagon earlier this month, Reuters was first to report, mentioned it was working with different companies to decide whether or not to blacklist SMIC for its purported hyperlinks to the Chinese army.

US firms together with Lam Research, KLA, and Applied Materials, which provide chipmaking tools, might now want to get licenses to ship sure items to SMIC.

It is unclear which suppliers acquired the letter, however sometimes as soon as the Commerce Department comes to the conclusion that there’s a threat of army use or diversion, it sends that info to the businesses.

The Commerce Department’s Bureau of Industry and Security declined on Saturday to remark particularly on SMIC, however mentioned it was “constantly monitoring and assessing any potential threats to U.S. national security and foreign policy interests”.

The administration has more and more educated its concentrate on Chinese firms that bolster Beijing’s army. Last month, the United States blacklisted 24 Chinese firms and focused folks it mentioned had been half of development and army actions within the South China Sea, its first such sanctions towards Beijing over the disputed strategic waterway.

© Thomson Reuters 2020



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