The Trump administration is considering adding SMIC, China’s largest chipmaker, to its list of entities.
In an exclusive report on Friday, Reuters quoted a U.S. Defense Department spokeswoman as saying that the Pentagon is working with other agencies to decide whether to take sanction action against SMIC. Such a sanction decision would force U.S. suppliers to apply for a license, which would be difficult to obtain, before supplying SMIC. Neither SMIC nor the Chinese Embassy in the U.S. responded in a timely manner to Reuters’ letters of comment on the matter.
SMIC also faces a new U.S. Department of Commerce restraining order against Huawei, which will require it to apply for a U.S. license if it relies on U.S. technology to make chips for Huawei. SMIC is one of Huawei’s chipmakers.
Earlier this week, the Defense Department recommended that the End User Committee (EUC) add SMIC to its list of entities. The committee, led by the Commerce Department, also has members from the State and Energy departments. Reuters has learned from unnamed sources familiar with the matter that the committee has decision-making authority over the list of entities. But the report said it was not clear whether other agencies would support such a proposal.
The list of entities currently includes 275 Chinese companies, including Huawei and ZTE, which have been named for violating sanctions, and Hikvision, which has helped Chinese authorities crack down on the Uighurs.
SMIC is China’s largest chipmaker, but is a second-tier competitor to industry leader TSMC.
According to industry sources cited in the Reuters report, SMIC’s inclusion on the entity list would have implications for major chip manufacturing equipment companies such as Lam Research, KLA Corporation and Applied Materials.
Pentagon officials did not say why the proposal was made. Reuters reports that SMIC has attracted attention for its ties to the Chinese military, according to another official who was briefed on the proposal and two former officials.
Last month, the United States announced a list of 24 companies and individuals involved in construction and military operations in the South China Sea. That was the first time the United States had imposed sanctions on Beijing over the South China Sea.
In the past few months, the Department of Defense has released two lists of Chinese companies allegedly owned or controlled by the Chinese military. Adding these companies to the list would give President Trump the authority to impose more severe penalties, but he has yet to do so.
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