U.S. Defense Blacklist Targets SMIC: China's Top Chipmaker Faces Restrictions

U.S. Defense Department to Blacklist SMIC Amid Rising Tech Tensions

Semiconductor Manufacturing International Corporation (SMIC), China’s largest chipmaker and a key global foundry player, is set to be added to the U.S. Department of Defense’s blacklist of companies allegedly tied to the Chinese military. This move aligns with the Trump administration’s escalating restrictions on Chinese tech firms over national security concerns.

Key Developments:

• Executive Order Impact: The blacklisting follows President Trump’s November 2020 executive order, effective January 11, 2021, prohibiting U.S. investors from purchasing securities of listed companies.
• SMIC’s Response: The company denies military affiliations, stating it “has no relationship with the Chinese military” and serves commercial clients exclusively.
• Market Position: SMIC controls ~4% of the global foundry market (per TrendForce) and has supplied major U.S. firms like Qualcomm and Broadcom.

Broader Context:

• New Additions: SMIC joins three other Chinese companies (China Construction Technology, CNOOC, and China International Engineering Consulting Corp) being added to the blacklist, which already includes 31 entities.
• Existing Restrictions: SMIC has faced U.S. export controls since October 2020, limiting access to American semiconductor manufacturing equipment.
• Historical Note: The firm delisted from the NYSE in 2019 citing low trading volume, unrelated to U.S.-China trade tensions.

Geopolitical Implications:

This action continues the Trump administration’s pressure campaign against Chinese tech leaders like Huawei and ByteDance. However, policy continuity remains uncertain as President-elect Biden prepares to take office on January 20, 2021.

TechCrunch has reached out to SMIC for additional comment.

Sources: Reuters | White House Executive Order | TrendForce Market Data