U.S. Places Restrictions on China’s Leading Chip Maker

WASHINGTON — The Trump administration has placed new restrictions on exports to Semiconductor Manufacturing International Corporation, China’s most advanced maker of computer chips, a measure that could deepen the technology conflict between China and the United States.

In a letter on Friday, the Department of Commerce told American companies in the chip industry that they must first acquire a license to export technology to SMIC and its subsidiaries. The department said it was taking the action after a review in which it determined that the Chinese company “may pose an unacceptable risk of diversion to a military end use in the People’s Republic of China.”

The measure, which could cut SMIC off from the American software and other technology it needs to make its products, comes as the Trump administration takes a harsher stance against Chinese technology companies that it has deemed a national security threat. The administration has clamped down on shipments to the Chinese tech giant Huawei, restricted exports to dozens of other Chinese companies by placing them on an export blacklist this year and moved to ban the Chinese-owned social media services WeChat and TikTok.

The Commerce Department and SMIC did not immediately reply to requests for comment. The letter was first reported by The Financial Times.

The Pentagon, in particular, has expressed concerns that SMIC, whose major shareholders include several Chinese state entities, has ties with the Chinese military. After Reuters reported this month that the Trump administration was considering blacklisting SMIC, the company issued a statement on WeChat saying that it produced chips solely for commercial and civilian users.

“We have no relationship with the Chinese military,” the company said.

Factories in China churn out a huge share of the world’s cellphones, computers and internet equipment. But the silicon brains of that gear are often shipped in from overseas.

Last year, mainland China imported more than $300 billion in computer chips, more than it spent on crude oil. The country’s leader, Xi Jinping, has put enormous resources toward making China more self-reliant in semiconductors and other advanced technologies.

But state support has only taken Chinese chip makers so far. Though SMIC is China’s most technologically advanced chip maker, its manufacturing processes are years behind those of industry leaders like Samsung and Taiwan Semiconductor Manufacturing Company in terms of the number of transistors they can squeeze onto a piece of silicon. That means SMIC cannot make the intricate chips that best support the latest, most demanding applications.

Even to produce its less sophisticated semiconductors, SMIC relies on software and machines from American companies. Analysts at the investment bank Jefferies estimate that up to half of SMIC’s equipment currently comes from U.S. suppliers. SMIC could struggle to stay in business if those partners cannot service and upgrade the company’s manufacturing equipment.

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