US slaps curbs on exports to China’s top chipmaker SMIC, citing dual use

In a letter dated 25 September, the Commerce Department cited the finding of the Bureau of Industry and Security that SMIC and its subsidiaries posed “an unacceptable risk of diversion to a military end use.” 

Accordingly, US firms must now apply for a licence to export certain products to China’s largest chipmaker. 

Unlike in the case of China’s Huawei Technologies Co, SMIC has not been put on the entity list of banned companies, which means the restrictions are not so severe.

The move to restrict exports of `Dual use technologies’ is part of a policy of deeper restrictions on Chinese technology companies, hitting more companies.

The Commerce Department is yet to reveal the full contents of the letter while SMIC has not received an official notice of the sanctions.

Shanghai-based SMAC, meanwhile, denied any link with the Chinese armed forces and said it does not manufacture goods for any military end-use.

The Trump administration accuses China of trying to dominate technology by stealing US intellectual property.

Besides, US cites the coronavirus pandemic and national security, including a new security law in Hong Kong to keep off Chinese market.

The Trump administration blacklisted Huawei, preventing the giant telecommunications provider from buying components from American suppliers and pressured allies to follow suit. ByteDance’s TikTok was the next calamity with President Donald Trump threatening to ban the video app. He said the service should be sold to American owners if TikTok wanted to continue operatins in the US.

Trump administration’s cubs would hit SMIC mist as nearly 50 per cent of its equipment comes from the US.

SMIC whose customers include US chipmakers Qualcomm Inc and Broadcom Inc has a market value of more than $29 billion.