Republican lawmakers press Biden to tighten export curbs on China's SMIC

[February 01, 2022]  WASHINGTON (Reuters) - U.S. Republican senators are urging the Biden administration to close a "loophole" in export controls imposed by former President Donald Trump on China's top chipmaker, SMIC, which they call a "clear national security threat."

 A logo of Semiconductor Manufacturing International Corporation (SMIC) is seen at China International Semiconductor Expo (IC China 2020) following the coronavirus disease (COVID-19) outbreak in Shanghai, China October 14, 2020. REUTERS/Aly Song

In a letter to Commerce Secretary Gina Raimondo and seen by Reuters, Tom Cotton and Bill Hagerty said they were "disheartened" by media reports suggesting the agency was blocking efforts to tighten export controls on U.S. technology destined for SMIC, which they say enjoys close ties to the Chinese military.

Tightening the controls "would close an important loophole and prevent the [Chinese Communist Party] and [the People's liberation Army] from using U.S. technology to advance its military modernization programs," the senators said in a letter dated Jan. 31, asking whether Raimondo supports added restrictions.

The Commerce Department and Semiconductor Manufacturing International Corp (SMIC) did not immediately respond to requests for comment.

The Trump administration placed SMIC on the U.S. Department of Commerce's trade blacklist in late 2020 over concerns that SMIC aids China's military.

Normally, U.S. suppliers are required to apply for a special license - which faces a tough standard of review - before shipping any U.S. items to a company on the blacklist.

However, when the Trump administration added SMIC to the list, it only applied that tough standard of review to highly specialized chipmaking equipment destined for the Chinese firm, granting a "case by case" review process for other U.S. items.

In practice, that has meant license applications have gotten tied up in lengthy review processes https://www.reuters.com/article/us-usa-china-smic-exclusive/exclusive-amid-shortage-u-s-suppliers-to-chinese-chip-giant-smic-struggle-to-get-export-licenses-idUSKBN2AW18B as policymakers debate whether to approve them. It has also angered some China hawks, after documents showed suppliers to SMIC obtained billions' worth in licenses https://www.reuters.com/article/usa-china-huawei-tech-idCNL1N2RH2AC.

Reuters reported in December that the Biden administration has not decided https://www.reuters.com/article/usa-china-smic-idCNL1N2T203P whether to block more sales of U.S. chipmaking equipment to SMIC, but raised the possibility of discussing it further with allies.

(Reporting by Alexandra Alper. Editing by Gerry Doyle)

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