The United States has imposed restrictions on exports to China’s biggest chip maker SMIC after concluding there’s an “unacceptable risk” equipment supplied to it could be used for military purposes.
Suppliers of equipment to SMIC will now have to apply for individual export licenses, according to a letter from the Department of Commerce on Friday.
The latest move marks a shift in US policy from earlier this year when applicants seeking military user licenses to sell to SMIC. They were told by the Commerce Department that the licenses weren’t necessary, according to three people familiar with the matter.
SMIC said it had not received any official notice of the restrictions and said it has no bond with the Chinese military. “SMIC reiterates that it manufactures semiconductors and provides services only for civilian and commercial end-users and uses,” SMIC said.
“The Company has no relationship with the Chinese military and does not manufacture for any military uses.” SMIC is the latest leading Chinese technology company to face US trade restrictions linked to national security issues.
Telecom giant Huawei Technologies had its access to chips curtailed by its addition to a Commerce Department blacklist known as the entity list.
SMIC’s new designation is not as serious as being blacklisted, which makes it difficult to get any export license approved.
The Pentagon earlier this month, said it was working with other agencies to determine whether to blacklist SMIC for its impersonate links to the Chinese military. Reuters reported.
US companies including Lam Research, KLA Corp, and Applied Materials, may now need to get licenses to ship goods to SMIC for those who supply chipmaking equipment,.
It is unclear which suppliers received the letter, but usually, once the Commerce Department comes to the conclusion that there is a risk of military diversion.
The Commerce Department’s Bureau of Industry and Security turn down on Saturday to comment on SMIC.
But said, they are constantly monitoring and assessing any potential threats to US national security and foreign policy interests.
The administration has increasingly trained its focus on Chinese companies that support Beijing’s military. Last month, the United States blacklisted 24 Chinese companies and targeted people it said were part of construction and military actions in the South China Sea, its first such sanctions against Beijing over the disputed strategic waterway.