US adds China’s SMIC to the Entity List, restricting access to US technology

Commerce Department said the Bureau of Industry and Security (BIS) is taking this action to protect US national security and is in response to China’s military-civil fusion (MCF) doctrine and evidence of activities between SMIC and entities of concern in the Chinese military industrial complex. 

“We will not allow advanced US technology to help build the military of an increasingly belligerent adversary.  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 US technology to support its military modernisation,” said Commerce Secretary Wilbur Ross. 

“Entity List restrictions are a necessary measure to ensure that China, through its national champion SMIC, is not able to leverage US technologies to enable indigenous advanced technology levels to support its destabilising military activities,” Ross added.

The Entity List designation limits SMIC’s ability to acquire certain US technology by requiring US exporters to apply for a licence to sell to the company.  Items uniquely required to produce semiconductors at advanced technology nodes — 10 nanometers or below — will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military-civil fusion efforts.

BIS recently added more than sixty other entities to the Entity List for actions deemed contrary to the national security or foreign policy interest of the United States.  These include entities in China that enable human rights abuses, entities that supported the militarisation and unlawful maritime claims in the South China Sea, entities that acquired US-origin items in support of the People’s Liberation Army’s programmes, and entities and persons that engaged in the theft of US trade secrets.

The Entity List is a tool utilised by BIS to restrict the export, re-export, and transfer (in-country) of items subject to the Export Administration Regulations (EAR) to individuals, organisations, and companies reasonably believed to be involved, or to pose a significant risk of becoming involved, in activities contrary to the national security or foreign policy interests of the United States.  Additional license requirements apply to exports, re-exports, and transfers (in-country) of items subject to the EAR to listed entities, and the availability of most licence exceptions is limited.