US tightens exports to China’s biggest chip maker SMIC

The new rule requires US firms to get a license before importing products to the company

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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 will now have to apply for individual export licences, according to a letter from the Commerce Department dated Friday and seen by Reuters.

Although no official statement is available on the website of the Commerce Department, the Wall Street Journal also said it has seen the copy of the letter, which said exports to SMIC or its subsidiaries “may pose an unacceptable risk of diversion to a military end use.”

SMIC said that it had not received any official notice of the restrictions.

The chipmaker reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-users.

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

Earlier this month, Reuters reported that the Pentagon is considering adding the chipmaker to a trade blacklist. “Any assumptions of the company’s ties with the Chinese military are untrue statements and false accusations.”

SMIC is the largest Chinese chip manufacturer and made its trading debut on Shanghai’s Nasdaq-style STAR Market in July, marking China’s biggest IPO in a decade. The Shanghai-headquartered chipmaker was listed in Hong Kong and New York in 2004 and delisted from the U.S. last year due to sluggish demand for its shares.

In April, the administration tightened export rules on shipping goods to China. It claims it’s seeking to keep US companies from selling products that could be used to help strengthen the Chinese military.

SMIC told Reuters in a statement that it makes semiconductors and provides services “solely for commercial end-users and end-uses,” and that it has “no relationship with the Chinese military and does not manufacture for any military end-users or end-uses.”