Continuing their focus on parties which have ties to the Chinese military, the Bureau of Industry and Security (BIS) has added 77 entities and people to the Entity List. The Department of Commerce (DOC) has also added a new Military End User (MEU) List this week, which includes 58 Chinese companies. This is part of an ongoing pursuit to combat efforts made by China to divert U.S. technology for their military programs.
Included in the additions to the Entity List is China’s top chipmaker, China’s Semiconductor Manufacturing International Corporation (SMIC). This addition was intended to prevent any further acquisition of sensitive U.S. technologies by China and other countries.
Entity List additions also include China-based DJI, which is one of the largest drone makers in the world, as well as companies in Hong Kong, Germany, France, Bulgaria, Italy, Pakistan, Malta, Russia, and the United Arab Emirates. These entities have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States.
BIS has cited a variety of reasons for adding these companies to the Entity List, including these companies having ties to China’s military, involvement in human rights abuses, support of China’s militarization of the South China Sea, stealing of U.S. trade secrets and violations of U.S. export controls. BIS has also removed four entries under the UAE and Israel and revised one existing entry under China and Pakistan.
The addition of SMIC to the Entity List will limit SMIC’s ability to acquire certain U.S. technology by requiring U.S. exporters to apply for a license to sell to the company. According to the U.S. Department of Commerce, “Items uniquely required to produce semiconductors at advanced technology nodes—10 nanometers or below—will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military-civil fusion efforts.”
These restrictions on SMIC are preemptive, as the company is mainly producing higher, older legacy technology nodes, and do not yet have the technologies to produce at lower nodes. To get to production levels at 10 nanometers and below, it is likely they would need a U.S. tool. These restrictions are also a result of the belief that SMIC’s clients are using their chips to support the Chinese military.
“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,” said Commerce Secretary Wilbur Ross.
A full list of additions to the Entity List can be found here. For further questions on the additions to the Entity List, please reach out to your Mohawk Global representative.