Exclusive-US to blacklist dozens of Chinese companies, including SMIC, sources say

WASHINGTON (Reuters) – The United States on Friday unveiled the country’s top chipmaker, SMIC. Dozens of Chinese companies are preparing to be added to the trade blacklist, two people familiar with the matter told Reuters on Thursday.

President Donald Trump’s attempt to limit China’s legacy of austerity is being seen as recent, not previously reported. It comes just weeks before Democratic presidential-elected Joe Biden takes office on January 20.

The Commerce Department is expected to add about 80 additional companies and affiliates to the so-called entity list, almost all of which are Chinese.

The Chinese Foreign Ministry said that if this was true, the blacklisting would be evidence of US oppression of Chinese companies and that Beijing would continue to take “necessary steps” to protect their rights.

“We urge the U.S. government to end its misconduct of uncontrolled repression of foreign companies,” ministry spokesman Wang Wenbin told a regular news conference in Beijing on Friday.

SMIC and the Commerce Department did not immediately respond to requests for comment.

The appointment by the Commerce Department is expected to name some Chinese companies that Washington says have ties to the Chinese military, some helping build and militarize artificial islands in the South China Sea, as well as some human rights abuses, sources said.

File photo: The logo of Semiconductor Manufacturing International Corporation (SMIC) was unveiled at the China International Semiconductor Expo (IC China 2020) on October 14, 2020 in Shanghai, China. Ritter / Ally Song / File photo

The Trump administration frequently uses entity listings to hit Chinese businesses – which now includes more than 275 China-based companies and affiliates.

These include telecom equipment giants Huawei Technologies Co. and 150 affiliates, and ZTE Corp. for surveillance violations, as well as surveillance camera maker Hikvision for suppressing China’s Uighur minority.

Frying Ties

Shares of Semiconductor Manufacturing International Corp., SMIC, formally fell 5.2% in Hong Kong on Friday, while its Shanghai-listed shares fell 1.8%. Benchmark indices in both markets were less than 1%.

SMIC is already in Washington’s Crosshairs.

In September, the Commerce Department assumed that there was an “unacceptable risk” to the company after it was concluded that certain equipment suppliers applied for export licenses and that the equipment supplied to it could be used for military purposes.

Last month, the Department of Defense effectively banned U.S. investors from launching its shares later next year, adding the company to a blacklist of alleged Chinese military companies.

SMIC It is often said that it has nothing to do with the Chinese military.

The U.S. supplier of the unit. As part of a bid by the administration to block access to chipmaking technology, U.S. The entity list designation will force the SMIC to obtain a special license from the Commerce Department before the supplier can send the key goods.

Sources said that a number of SMICs have been included in the list of commercial entities. It is also expected to include companies involved.

S.I.M.C. Is the largest Chinese chip manufacturer but it is Taiwan Semiconductor Manufacturing Co., a market leader in the industry. It has sought to build a foundry for computer chips that can compete with TSMC.

Relations between Washington and Beijing have been strained by Beijing’s coronavirus outbreak, the imposition of a national security law in Hong Kong and rising tensions in the South China Sea, leading to the collapse of two of the world’s top economies.

Reported by David Sherdson and Alexandra Alper; Additional reporting by Humera Pamuk, Mike Stone, Karen Freefield, Gabriel Crossley and Tom Westbrook; Written by Humera Pamuk; Edited by William Mallard