US Intensifies Crackdown On Chinese Firms, Imposes Curbs On Exports To China’s Largest Chip Manufacturer SMIC 

The United States government intensified its crackdown on Chinese chipmaker SMIC (Semiconductor Manufacturing International Corp) by imposing export restrictions citing "unacceptable risk" that equipment supplied to it could be used for military purposes, The Financial Times reported.

SMIC is China’s largest contract chip manufacturer. The latest move by the U.S could jeopardise China’s long-standing ambitions to become self-reliant on critical technologies.

U.S. suppliers of certain equipment to SMIC will now need a license to export certain products to China’s largest chipmaker because of an “unacceptable risk” that the goods could be used for military purposes, the Financial Times reported, citing a letter the Commerce Department sent to the company.

The Commerce Department in its letter said exports to SMIC “may pose an unacceptable risk of diversion to a military end use in the People’s Republic of China.” It said suppliers “must submit an application for an individually-validated license prior to exporting, reexporting or transferring in-country” certain sensitive technologies.

The punitive action against SMIC is on the lines of recent U.S measures against Chinese Telecom behemoth Huawei Technologies Co.

The U.S. action is likely to spell huge trouble for SMIC as it depends on American companies for supply of major chip manufacturing equipment. Widely regarded as ‘national champion’ for its pivotal role in China’s ambition to turn self-reliant on advanced technologies like chips, SMIC is backed by several state-owned entities.

Responding to the latest U.S sanctions, SMIC said it had not received any official notice of the restrictions and said it has no ties with the Chinese military.

"SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses," SMIC said.

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

A recent reasearch report by US defence contractor SOS International had observed that SMIC worked with one of China’s largest defence companies, and that university researchers associated with the Chinese military were designing projects to use SMIC technology. It might be “impossible” for the researchers’ efforts to use chips made anywhere else, SOS added.

SMIC has rejected the allegations that it is connected to Chinese defence establishment. It maintains that it offers chips and services “solely” for civilian uses, and that it had “no relationship with the Chinese military.”