China's SMIC needs tighter export curbs from Biden -senators (updated)

USU Ventures AG

01/02/2022 21:25

(Adds Raimondo comment)
    WASHINGTON, Feb 1 (Reuters) - U.S. Republican senators are
urging the Biden administration to close a "loophole" in export
controls imposed by former President Donald Trump on China's top
chipmaker, SMIC  0981.HK , which they call a "clear national
security threat."
    In a letter to Commerce Secretary Gina Raimondo and first
reported by Reuters, Bill Hagerty and Tom Cotton said they were
"disheartened" by media reports suggesting her agency was
blocking efforts to tighten export controls on U.S. technology
destined for SMIC, which they say enjoys close ties to the
Chinese military.
    Tightening the controls "would close an important loophole
and prevent the (Chinese Communist Party) and (the People's
Liberation Army) from using U.S. technology to advance its
military modernization programs," the senators said in a letter
dated Jan. 31, asking whether Raimondo supports added
restrictions. 
    When asked by Hagerty about the company in a hearing on
Tuesday afternoon, Raimondo said she had not seen the letter and
would get back to the Senator. 
    "I share your deep, deep concern with doing everything we
can to deny China our technologies," she said. Semiconductor
Manufacturing International Corp (SMIC) did not respond to a
request for comment.
    The Trump administration placed SMIC on the U.S. Department
of Commerce's trade blacklist in late 2020 over concerns that
SMIC aids China's military.
    Normally, U.S. suppliers are required to apply for a special
license - which faces a tough standard of review - before
shipping any U.S. items to a company on the blacklist. 
    However, when the Trump administration added SMIC to the
list, it only applied that tough standard of review to highly
specialized chipmaking equipment destined for the Chinese firm,
granting a "case by case" review process for other U.S. items.
    In practice, that has meant license applications have gotten
tied up in lengthy review processes https://www.reuters.com/article/us-usa-china-smic-exclusive/exclusive-amid-shortage-u-s-suppliers-to-chinese-chip-giant-smic-struggle-to-get-export-licenses-idUSKBN2AW18B
 as policymakers debate whether to approve them. It has also
angered some China hawks, after documents showed suppliers to
SMIC obtained billions' worth in licenses https://www.reuters.com/article/usa-china-huawei-tech-idCNL1N2RH2AC.
    Reuters reported in December that the Biden administration
has not decided https://www.reuters.com/article/usa-china-smic-idCNL1N2T203P
 whether to block more sales of U.S. chipmaking equipment to
SMIC but raised the possibility of discussing it further with
allies.   

 (Reporting by Alexandra Alper; Editing by Gerry Doyle and
Cynthia Osterman)
 ((Alexandra.Alper@thomsonreuters.com; +1(202)354-5865; Reuters
Messaging: alexandra.alper.thomsonreuters.com@reuters.net - https://twitter.com/alexalper?lang=en))