Exclusive US to blacklist dozens of Chinese companies, including SMIC, sources say

WASHINGTON (Reuters) – The United States will add dozens of Chinese companies, including SMIC, the country’s chip maker, to the commercial blacklist on Friday, two people familiar with the matter said on Thursday.

This move, which has not been reported before, is seen as President Donald Trump’s latest attempt to cement his tough legacy on China. It comes just weeks before Democratic President-elect Joe Biden takes office on January 20.

In total, the United States is expected to add about 80 additional companies and affiliates to the so-called list of entities, almost all Chinese.

The Department of Commerce’s designations should name some Chinese companies that Washington says have links to the Chinese military, including some that help it build and militarize the artificial islands in the South China Sea, as well as some involved in alleged human rights violations. said sources.

The Trump administration has often used the list of entities – which now includes more than 275 Chinese companies and subsidiaries – to reach out to major Chinese industries.

These include telecommunications equipment giants Huawei Technologies Co and 150 affiliates and ZTE Corp. for violating sanctions, as well as surveillance camera maker Hikvision for suppressing the Uighur minority in China.

SMIC, Semiconductor Manufacturing International Corp., has already been in Washington’s sights.

In September, the Commerce Department mandated that suppliers of certain company equipment apply for export licenses after concluding that there was an “unacceptable risk” that the equipment provided could be used for military purposes.

SMIC, the Department of Commerce and the Chinese Embassy in Washington did not immediately respond to requests for comment Thursday.

Last month, the Department of Defense added the company to a blacklist of alleged Chinese military companies, effectively banning US investors from buying their shares starting next year.

SMIC has repeatedly said it has nothing to do with the Chinese military.

The designation of the list of entities would force SMIC to apply for a special license from the Commerce Department before a US supplier could send it key goods, part of an offer by the administration to reduce access to sophisticated US chip manufacturing technology.

The trade is also expected to add numerous SMIC affiliates to the list of entities, sources said.

SMIC is China’s largest chip maker, but it follows Taiwan Semiconductor Manufacturing Co., the market leader in the industry. He tried to build foundries to make computer chips that could compete with TSMC.

Washington-Beijing ties have become increasingly antagonistic in the past year, as the world’s top two economies have faced Beijing’s management of the coronavirus outbreak, the imposition of a national security law in Hong Kong and the rise of tensions in the South China Sea.

Reporting by David Shepardson and Alexandra Alper; Additional reporting by Humeyra Pamuk, Mike Stone and Karen Freifeld; Written by Humeyra Pamuk; Mountainous of William Mallard