The US Department of Defense is considering the placement of China’s largest chipmaker SMIC in its trade Entity List.
Being listed in the Entity List will potentially ban the company from transacting business with American companies.
A Pentagon spokesperson said the Trump administration is considering enlisting Semiconductor Manufacturing International Corporation into its trade blacklist, the New York Times reported.
The spokesperson said the Defense Department is working with other federal agencies to determine whether to place SMIC in the Entity List that would force U.S. companies to seek a license before shipping any products or technology to the company.
The Pentagon made the proposal to the End User Committee, a panel led by the U.S. Commerce Department that makes decisions on the placement of companies to the entity listings.
With the ongoing tech war between the U.S. and China, the Entity List is often used by the Trump administration to block Chinese companies from trading with American firms.
So far, there are more than 200 Chinese companies that are included in the Entity List including Chinese tech giants like ZTE and Huawei. Other firms that are also been embroiled in the ongoing US-China tech war include ByteDance, owner of short video app TikTok, and Tencent, which owns popular messaging app WeChat.
SMIC denies ties with the Chinese military
On Saturday, SMIC in a statement said they are in ‘shock’ with the latest pronouncement from the U.S. DoD.
“Any assumptions of the company’s ties with the Chinese military are untrue statements and false accusations. The Company is in complete shock and perplexity to the news,” the SMIC statement said.
SMIC, an international semiconductor foundry based in Shanghai, said they are ‘strictly complying’ with the laws and regulations in countries where they conduct business.
“Since its inception, the Company has been fully compliant with all rules and laws. SMIC has maintained long-term strategic partnerships with multiple U.S.-based semiconductor equipment suppliers. Over the years, the Bureau of Industry and Security (BIS) has granted numerous export licenses for the Company,” the statement said.
While SMIC pales in comparison to other semiconductor manufacturing firms like Samsung, Taiwan Semiconductor Manufacturing Company, and the US-based Intel, Qualcomm, and NVIDIA, it has maintained a large customer base in the U.S., Europe, and other Asian countries.
SMIC stressed it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses and denied any relationship with the Chinese military.
Several Chinese companies have been the subject of trade blacklists by the US as the Trump administration has made claims they are being used by China’s Communist Party for spying and other activities that pose threats to American sovereignty and national security.
The Chinese company, meanwhile, said they had been granted Validated End-User authorization by the Bureau of Industry Security and has hosted several visits from U.S. government officials since 2016.
However, SMIC said they are open to sincere and transparent communication with the U.S. Government agencies in hopes of resolving potential misunderstandings.
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