The Commerce Department warned U.S. companies of steps it must take before exporting parts to China’s biggest manufacturer of computer chips, saying Friday that there is an “unacceptable risk” that parts sold to Semiconductor Manufacturing International Corporation could be used by the Chinese military.
The department’s letter is stricter than what the department said earlier this year, telling applicants for “military end user” licenses to sell to the firm that they were not required, according to Reuters, citing three people familiar with the matter.
SMIC, which has denied supplying products to the Chinese military, told Reuters it has yet to receive a notification of new restrictions.
“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.”
Analysts at brokerage firm Jefferies said the department has not added SMIC to its Entity List, under which U.S. companies must apply for licenses to export to the company. Chinese telecom firm Huawei is on the list, while the U.S. has moved to ban the video app TikTok outright.
“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,” Nicholas Klein, a Washington lawyer who specializes in international trade, told Reuters.
It was not clear which firms the department sent the letter to. The department’s Bureau of Industry and Security told the news service Saturday that it is “constantly monitoring and assessing any potential threats to U.S. national security and foreign policy interests.”