US pulls the plug on China’s leading chipmaker SMIC

Dozens of companies have been singled out amid growing trade tension between Washington and Beijing

Chinese chip manufacturer SMIC has been added to the blacklist of dragon companies in the United States.

Dozens of firms have been singled out amid growing trade tension between Washington and Beijing, including 5G giants Huawei and ZTE, as well as high-tech drone maker SZ DJI Technology.

Commerce Department Secretary Wilbur Ross pointed out it was crucial that “advanced technology” from the United States should not “help to build the military of an increasingly belligerent adversary.”

The facts:

  • Semiconductor Manufacturing International Corporation or SMIC is China’s leading chip group.
  • Blacklisted companies placed on the entity-list need to apply for licenses from the Commerce Department to access American technology and components.
  • Up to 77 firms and affiliates have been placed on the entity list, including 60 Chinese companies.
  • Major groups already on the entity-list are Huawei, ZTE and surveillance conglomerate Hikvision.

What US Secretary of State Mike Pompeo said: “The United States will use all countermeasures available, including actions to prevent [Chinese] companies and institutions from exploiting US goods and technologies for malign purposes.”

Reaction to the news: “We need to replace sanctions with dialogue and consultation … [this is the] biggest destabilizing factor to regional and global security. China is not a threat to the United States … was not, is not and will not be a threat,”  Foreign minister Wang Yi said.

China Factor comment: Outgoing US President Donald Trump continues to ratchet up pressure on Beijing with just weeks left in the White House, boxing in his successor Joe Biden. But then, relations between the world’s two largest economies have become increasingly antagonistic during the past two years. Flashpoints include a protracted trade war, human rights issues in Xinjiang province and Hong Kong, as well as mounting military tension in the South China Sea.