WASHINGTON (Reuters) – The United States confirmed Friday that it will add dozens of Chinese companies, including top chip maker SMIC and Chinese drone maker SZ DJI Technology Co Ltd, to a commercial blacklist.
The move, first reported by Reuters, is seen as the latest effort by Republican President Donald Trump to cement his tough legacy on China. It comes just weeks before Democratic President-elect Joe Biden takes office on January 20.
The U.S. Commerce Department confirmed the decision early Friday, saying the action against SMIC “comes from China’s military-civilian fusion (MCF) doctrine and evidence of activities between SMIC and interest entities in the Chinese military industrial complex.”
A US Commerce Department official told reporters at a conference call that the world’s largest drone company DJI has been added to the list. DJI did not immediately respond to a request for comment.
Commerce Secretary Wilbur Ross said in a statement that the department “will not allow US advanced technology to help build an increasingly belligerent adversary’s army.”
Ross said the government will deny licenses to prevent SMIC from accessing technology to produce semiconductors at advanced levels of technology – 10 nanometers or less.
In an address to Asia on Friday, Chinese State Councilor Wang Yi, who is also the country’s foreign minister, noted the extensive list of US sanctions and called on Washington to stop “arbitrary suppression” of Chinese companies. .
The Commerce Department said it was adding a total of 77 companies and subsidiaries to the so-called list of entities, including 60 Chinese companies. Reuters previously reported that the department added about 80 companies, most of them Chinese.
China’s foreign ministry has said that if true, the blacklist would be evidence of US oppression of Chinese companies and that Beijing will continue to take “necessary steps” to protect its rights.
“We urge the United States to stop its misbehavior of unjustified oppression of foreign companies,” ministry spokesman Wang Wenbin said at a regular news conference in Beijing on Friday.
SMIC did not immediately respond to requests for comment.
The designations made by the Commerce Department include some entities in China that allow alleged human rights abuses and some that help him build and militarize the artificial islands in the South China Sea, the agency said.
He also cited entities that purchased items of American origin in support of the People’s Liberation Army programs and entities and individuals who engaged in the theft of American trade secrets.
Companies previously added to the list include telecommunications equipment giants Huawei Technologies Co and 150 affiliates and ZTE Corp for sanctions violations, as well as surveillance camera maker Hikvision for suppressing the Uighur minority in China.
Shares of SMIC, officially Semiconductor Manufacturing International Corp., fell 5.2% in Hong Kong on Friday, while the company’s Shanghai-listed shares fell 1.8%. The benchmarks in the two markets fell below 1%.
SMIC had 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.
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 Commerce Department adds nearly a dozen SMIC-affiliated companies to the list of entities, Ross 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 for the manufacture of computer chips that could compete with those of 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, Karen Freifeld, Tom Daly Gabriel Crossley and Tom Westbrook; Written by Humeyra Pamuk and David Shepardson; Edited by William Mallard, Steve Orlofsky and Jonathan Oatis