The U.S. government adds chipmaker SMIC, drone maker DJI, and more firms to trade blacklist

The United States Department of Commerce today added 77 more Chinese companies to its Entity List, effectively banning the export of U.S. technologies and intellectual properties to the companies without an explicit license from the government. Two of the major companies include Semiconductor Manufacturing International Corporation (SMIC) and its subsidiaries, and one of the world’s most popular drone makers, Shenzhen-based SZ DJI Technologies.

The Commerce Department cites “evidence of activities between SMIC and entities of concern in the Chinese military industrial complex” as the reason for the ban on SMIC. However, DJI’s entry into the list reportedly stems from the company’s role in helping the Chinese government in surveillance activities of citizens that amounts to human right violations.

Commerce Secretary Wilbur Ross said in a statement:

“We will not allow advanced U.S. technology to help build the military of an increasingly belligerent adversary[.] Between SMIC’s relationships of concern with the military industrial complex, China’s aggressive application of military civil fusion mandates and state-directed subsidies, SMIC perfectly illustrates the risks of China’s leverage of U.S. technology to support its military modernization.”

The department officials added that the blacklisted entities include companies that “have contributed to China’s militarization of disputed outposts in the South China Sea, unlawful maritime claims in the South China Sea, and intimidation and coercion of other coastal states lawfully accessing and developing offshore marine resources.”. Reuters reports that China’s State Councillor and foreign minister Wang Yi called on the U.S. to stop the “arbitrary suppression” of Chinese companies.

The additional companies join the likes of Huawei on the list – which has been heavily impacted by the restrictions and has claimed that its survival is at stake owing to the challenges faced. The ban on SMIC could further cause strain on the firm since it has been investing in the chipmaker to boost local production in view of the shortage in chip supplies from companies like TSMC. This has also caused the divestiture of Honor.

With president-elect Biden set to take oath next month, it will be interesting to see if these policies change with the impending change of the administration and how these bans further affect the ties between the two countries.

Source: U.S. Department of Commerce (1)(2) via The Washington Post

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