US Adds Dozens Of Chinese Firms To Trade Blacklist

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The White House. Image credit: US government

Outgoing US administration adds chipmaker SMIC and drone giant DJI to national security blacklist, increasing pressure on country’s tech industry

The US has added dozens of Chinese companies to a trade blacklist, including chip giant SMIC and drone maker DJI, significantly increasing its economic restrictions on the country’s tech industry.

The move comes in the closing days of the current Trump administration, with president-elect Joe Biden due to take office in January.

The move to place companies on the national security “entity list” means US companies will be required to apply for licences in order to sell goods or services to the named companies.

The US Department of Commerce said it will presumptively deny those licences, making it difficult for SMIC to obtain key technologies for producing the most advanced microprocessors.

Chip sanctions

Shanghai-based SMIC, which is owned by the Chinese government, was founded in 2000 and has become the most prominent chipmaker on the Chinese mainland.

It has become a key part of China’s ambition to create a cutting-edge domestic chip industry that would make it less reliant on US technology.

The company currently trains Taiwan’s TSMC, a leading industry player, in technology and has sought to build foundries that can compete with those of TSMC.

Earlier this month the US Department of Defence added SMIC to a blacklist that bars US investors from investing in the firm due to alleged links to China’s military.

“We will not allow advanced US technology to help build the military of an increasingly belligerent adversary,” said US commerce secretary Wilbur Ross in a statement.

“SMIC perfectly illustrates the risks of China’s leverage of US technology to support its military modernisation.”

SMIC has denied any relationship with the Chinese military.

Technology transfer

The addition of DJI to the list does not prevent consumers from buying its products, but makes it more difficult for the company to obtain US technology for its design and manufacturing processes.

DJI is by far the world’s biggest consumer drone maker, accounting for around 70 percent of the market.

The companies join China’s dominant telecoms equipment makers Huawei and ZTE on the list, as well as surveillance camera maker Hikvision.

The US added a total of 77 companies and affiliates to the list on Friday, including 60 Chinese companies deemed “contrary to the national security or foreign policy interests of the United States”.

Chinese foreign minister Wang Yi said the US was “overstretching the notion of national security” and urged “dialogue and consultation” in place of sanctions, according to local media reports.

Trade tensions between the US and China have been going on for several years, but have intensified in recent months.

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