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The
move, which was first reported by Reuters, is seen as the latest
in President Donald Trump's efforts to cement his tough-on-China
legacy. It comes just weeks before Democratic President-elect
Joe Biden is set to take office on Jan. 20.
The U.S. Commerce Department confirmed the decision early
Friday, saying the action "stems from China’s military-civil
fusion (MCF) doctrine and evidence of activities between SMIC
and entities of concern in the Chinese military industrial
complex."
Commerce Secretary Wilbur Ross said in a statement that the
department would "not allow advanced U.S. technology to help
build the military of an increasingly belligerent adversary."
Ross said the government would presumptively deny licenses to
prevent SMIC from accessing technology to produce semiconductors
at advanced technology levels - 10 nanometers or below.
Ross said in a Fox Business interview that the United States was
adding a total of 77 companies and affiliates to the so-called
entity list, including 60 Chinese companies. Reuters reported
earlier the department was adding about 80 companies, most of
them Chinese.
China's foreign ministry said that if true, the blacklisting
would be evidence of U.S. oppression of Chinese companies and
that Beijing would continue to take "necessary measures" to
protect their rights.
"We urge the U.S. to cease its mistaken behavior of unwarranted
oppression of foreign companies," ministry spokesman Wang Wenbin
told a regular news conference in Beijing on Friday.
SMIC did not immediately respond to requests for comment.
The designations by the Commerce Department include some
entities in China that enable alleged human rights abuses and
some helping it construct and militarize artificial islands in
the South China Sea, the department said.
It also cited entities that acquired U.S.-origin items in
support of the People’s Liberation Army’s programs, and entities
and persons that engaged in the theft of U.S. trade secrets.
Companies previously added to the list include telecoms
equipment giants Huawei Technologies Co and 150 affiliates, and
ZTE Corp over sanction violations, as well as surveillance
camera maker Hikvision over suppression of China's Uighur
minority.
FRAYING TIES
Shares in SMIC, formally the Semiconductor Manufacturing
International Corp, fell 5.2% in Hong Kong on Friday, while the
company's Shanghai-listed shares declined 1.8%. The benchmark
indices in the two markets were down less than 1%.
SMIC has already been in Washington’s crosshairs.
In September, the Commerce Department mandated that suppliers of
certain equipment to the company apply for export licenses after
concluding there was an "unacceptable risk" that equipment
supplied to it could be used for military purposes.
Last month, the Defense Department added the company to a
blacklist of alleged Chinese military companies, effectively
banning U.S. investors from buying its shares starting late next
year.
SMIC has repeatedly said that it has no relationship with the
Chinese military.
The entity list designation would force SMIC to seek a special
license from the Commerce Department before a U.S supplier could
send it key goods, part of a bid by the administration to curb
its access to sophisticated U.S. chipmaking technology.
Commerce is adding nearly a dozen SMIC-affiliated companies to
the entity list, Ross said.
SMIC is the largest Chinese chip manufacturer but trails Taiwan
Semiconductor Manufacturing Co, the industry's market leader. It
has sought to build out foundries for the manufacture of
computer chips that can compete with those of TSMC.
Ties between Washington and Beijing have grown increasingly
antagonistic over the past year as the world's top two economies
sparred over Beijing's handling of the coronavirus outbreak,
imposition of a national security law in Hong Kong and rising
tensions in the South China Sea.
(Reporting by David Shepardson and Alexandra Alper; Additional
reporting by Humeyra Pamuk, Mike Stone, Karen Freifeld, Gabriel
Crossley and Tom Westbrook; Writing by Humeyra Pamuk; Editing by
William Mallard and Steve Orlofsky)
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