The U.S. Department of Commerce (DOC) on Friday blacklisted Semiconductor Manufacturing International Corp. (SMIC) along with 60 other companies from China citing belief that these entities have ties with the Chinese People Liberation Army. The additions to the DOC's Entity List greatly limits the abilities of these businesses, which also includes drone company DJI, to obtain almost all advanced technologies developed in the U.S.
The addition of SMIC to the U.S. Entity List means that from now on any high-tech U.S. company planning to sell certain domestically developed technology to the Chinese contract maker of semiconductors will have to apply for a special export license.
Specifically, the DOC wants producers of tools and other technologies required to make chips using 10nm nodes or finer to apply for the license, which will be subject to a presumption of denial.
The inclusion of SMIC into the Entity List restricts the company's access to equipment, parts, materials and software designed in the U.S. Without these technologies, SMIC not only loses ability to procure new equipment or develop new fabrication technologies, but will also eventually have problems keeping its fabs running as they require spare parts and various materials.
"We will not allow advanced U.S. technology to help build the military of an increasingly belligerent adversary," said Commerce Secretary Wilbur Ross. "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."
Previously, export of advanced technologies to China also required a license, but there were no presumption of denial.
Earlier this year, the DOC restricted exports of advanced technologies to China, Russia and Venezuela to combat military circumvention efforts. In addition, the U.S. government restricted exports of equipment produced by U.S. companies to Hong Kong, which served as a path for Chinese companies to obtain advanced tools without needing to get a license from the U.S. government.
"Entity List restrictions are a necessary measure to ensure that China, through its national champion SMIC, is not able to leverage U.S. technologies to enable indigenous advanced technology levels to support its destabilizing military activities," said Ross.
Despite new sanctions from the U.S., SMIC has reportedly renewed talks with Netherlands-based ASML, the world's largest producer of lithography tools, about access to its extreme ultraviolet (EUV) lithography scanner. As reported by DigiTimes, this tech is expected to be critical in SMIC's development of sub-7nm processes.