U.S. Sets export restrictions on China’s top chip maker

Department of Commerce Computer-chip companies have been told that they must obtain a license before exporting some of the technology to China’s largest semiconductor manufacturer, which is a blow to China’s efforts to compete in advanced technology.

The department made the requirement in a letter to the computer-chip industry on Friday. The letter, a copy of which has been reviewed by the Wall Street Journal, says the semiconductor is being exported to Manufacturing International. Corpo.

Smicky -3.68%

Or its subsidiaries are at risk of being used for Chinese military activities.

One of the tools used to make chips from U.S. operations is SMIC. Threatened to cut. American companies are large suppliers of such devices. S.I.M.C. Has been endorsed by many state-owned companies and is under pressure from Beijing to become self-reliant on advanced technologies such as chips.

A spokesman for SMIC said on Saturday that we have no plans to withdraw from the US. We continue to engage constructively and openly with the department’s commerce. “SIMC has reiterated that it manufactures semiconductors and provides services only for civilian and commercial end users and end users. The company has no ties to the Chinese military and does not produce for military end users or end use. ”

A spokesman for the Commerce Department said its Bureau of Industry and Security, the agency responsible for export control, said “U.S. Oversees and monitors any potential threats to national security and foreign policy interests. While we cannot comment on any specific matter, BIS, along with its intergenerational partners, guarantees to take appropriate action. ”

The Trump administration has been considering whether to impose an export ban on SMIC for weeks. Earlier this month, the Department of Defense revealed that U.S. agencies had included SMICs in the Commerce Department’s entity list. Whether to add or not is under discussion, a step by which a specific SMIC Suppliers will also have to apply for a license.

The tech war between the US and China has knocked out Ticket OK and Huawei and shocked American companies manufacturing and selling in China. WSJ explains how Beijing will pour money into high-tech chips as it seeks to become self-sufficient. Video / Picture: George Downs / Wall Street Journal

According to people familiar with the issue, the issues under discussion include SMIC. Whether China provides assistance to the defense establishment. The Trump administration is more concerned about the practice of leaning on private companies to advance Beijing’s military objectives, an effort known as military-civil fusion.

The Trump administration has tightened restrictions on Chinese companies exporting American technology to what it sees as a security threat. Dozens of companies, ranging from the telecom company Huawei Technologies to the lesser known ones by the US.Involvement in human rights orders has been added to the entity list in recent years.

In April, the administration The companies announced tightening export rules to prevent the sale of products that could strengthen China’s military.

The Commerce Department said in its letter that SMIC Exports of “People’s Republic of China could be an unacceptable risk of being turned into military end use in China.” It states that suppliers must submit an application for a personally accredited license before exporting, reporting or transferring some sensitive technology.

Manufacturers of semiconductor-manufacturing equipment have banned SMICs after the Commerce Department announced strict licensing requirements under the rule in April. So concerned about the potential expansion of military end-user positions.

Following the implementation of this stringent action in late July, companies worked extra hard and in the absence of specific commerce guidance, relied on their lawyers to determine whether Chinese consumers are subject to the new requirements.

The full effect of the designation depends on whether SMIC licenses suppliers to the Commerce Department. The department has in the past charged suppliers of banned Chinese companies with Huawei’s U.S. In some cases, including suppliers, such export licenses have been issued.

Write to Dan Strumpf at [email protected]

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