The US government on Friday slapped harsh restrictions on Semiconductor Manufacturing International Corporation (SMIC) as the Trump administration continues to pile pressure on Chinese firms during its final weeks.
Dozens of Chinese companies, including SMIC and drone maker DJI, were added to the Commerce Department’s so-called Entity List, which effectively cuts them off from US suppliers and technology.
“We will not allow advanced US technology to help build the military of an increasingly belligerent adversary,” US Commerce Secretary Wilbur Ross said in a statement, adding that the company “perfectly illustrates” the risks of China using US technology to modernize its military.
SMIC has said previously that it has no relationship with the Chinese military.
The Entity List designation requires US exporters to apply for a license to sell to SMIC. “Items uniquely required to produce semiconductors at advanced technology nodes — 10 nanometers or below — will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military-civil fusion efforts,” the US Commerce Department said.
SMIC is already dealing with another major headache. Chinese state media reported earlier this week that its co-CEO Liang Mong Song is resigning. In an unusual turn of events, the company said in a statement on Wednesday that it was trying to confirm those reports, though it had known about Liang’s “desire to resign under certain conditions.”
Asked about the Reuters report, a spokesperson for China’s Ministry of Foreign Affairs on Friday accused Washington of “using its state power to suppress Chinese companies.”
“We urge the US to stop its wrongful behavior of unreasonably suppressing foreign enterprises,” Wang Wenbin told reporters at a regular press briefing. “China will continue to take necessary measures to safeguard the legitimate rights and interests of Chinese enterprises.”
SMIC plays a critical role in powering China’s technological ambitions. Much of China’s supply of chipsets comes from foreign companies, which power everything from Chinese smartphones and computers to telecommunications gear. Last year the country imported $306 billion worth of chips, or 15% of the value of the country’s total imports, according to government statistics.
The loss of Liang could complicate things, as the company’s recent technology progress was “directly attributable” to him, analysts at Bernstein wrote in a research note earlier this week.
Pressure from Washington threatens to make it even tougher for the company to catch up to foreign rivals.
The US Department of Defense earlier this month added the firm to a list of companies the agency claims are owned or controlled by the Chinese military. That decision means Americans are banned from investing in SMIC.