Amid ongoing tension with Beijing, the United States is considering to blacklist China’s largest manufacturer of semiconductors. According to reports, the Trump administration may impose export restrictions on Semiconductor Manufacturing International Corp. The United States Department of Defense is discussing whether SMIC should be added to a Commerce Department entity list. This will effectively ban trade with US companies. The move will bar the company from receiving specific goods made in America. This will be a big blow for SMIC as it couldn’t get a lot of equipment used by it in making of chips. The Department of Defense is considering the move as there are concerns that SMIC might be helping China’s defense infrastructure.
A report was recently issued by US defense contractor SOS international claiming that the chipmaker company worked with one of the largest defense companies in China. Moreover, projects are being designed by university researchers associated with the Chinese military to use SMIC technology. SOS said that it might be a tough task for researchers to used chips made anywhere else. But the connection has been outrightly denied by SMIC. The company clarified that the chips and services offered by it are only for civilian uses and that it had no association with the Chinese military.
The links between SMIC and the Chinese military have not been firmly established and there is no surety that the discussion can lead to a ban. If the US decides to add SMIC in the blacklist, it will escalate the tense trade war between the two countries. It has reported that there are very little or no alternatives to American parts and the company can face some trouble in maintaining or growing its factories. China can also retaliate and this would hurt US companies that are dependent on Chinese parts and manufacturing for their products. This could get very ugly. The move comes close on the heels of the Trump administration issuing executive orders of banning transactions with ByteDance. The US has forced ByteDance’s popular video-sharing app TikTok to divest operations in the United States.