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Concerns Of Military Use, US Restricts Export To China SMIC

China SMIC
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EDITOR NOTE:  In yet another move escalating trade tensions between the US and China, the White House is tightening its exports to Chinese chipmaker SMIC on suspicions that it’s using  the exports to bolster its country’s military, whose position of mutual enmity is tempered only by trade. SMIC denies such allegations. Interestingly, this disrupts the globalist notion that sending goods rather than “bullets” across international borders can bolster global peace and prosperity. In this case, the suspicion is that our exported goods are being converted into proverbial bullets. The Pentagon, Commerce Department, and other agencies are currently investigating the matter, deciding whether to give SMIC blacklisted designation.

The United States has imposed restrictions on exports to China’s biggest chip maker SMIC after concluding there is an “unacceptable risk” equipment supplied to it could be used for military purposes.

Suppliers of certain equipment to Semiconductor Manufacturing International Corporation 0981.HK will now have to apply for individual export licenses, according to a letter from the Commerce Department dated Friday and seen by Reuters.

The latest move marks a shift in U.S. policy from earlier this year, when applicants seeking “military end user” licenses to sell to SMIC were told by the Commerce Department that the licenses weren’t necessary, according to three people familiar with the matter.

SMIC said it had not received any official notice of the restrictions and said it has no ties with the Chinese military.

“SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses,” SMIC said.

“The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses.”

SMIC is the latest leading Chinese technology company to face U.S. trade restrictions related to national security issues or U.S. foreign policy efforts. Telecoms giant Huawei Technologies [HWT.UL] had its access to high-end chips curtailed by its addition to a Commerce Department blacklist known as the entity list.

“There’s been a lot of coverage on the Trump administration’s actions regarding TikTok, but the more significant action - from a global economic standpoint and that will have considerable ripple effects through global supply chains - are the increasing restrictions on SMIC and other Chinese national champions like Huawei,” said Nicholas Klein, a Washington lawyer who specializes in international trade. He said these actions are more likely to draw a retaliatory response from Beijing.

The United States has moved to ban the popular short video app TikTok, citing national security concerns stemming from its Chinese ownership.

SMIC’s new designation is not as severe as being blacklisted, which makes it difficult to get any export license approved.

The Pentagon earlier this month, Reuters was first to report, said it was working with other agencies to determine whether to blacklist SMIC for its purported links to the Chinese military.

Originally posted on Reuters

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