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US adds Chinese SMIC-linked firms to restricted chip trade list
The United States has added two Chinese firms, GMC Semiconductor Technology (Wuxi) and Jicun Semiconductor Technology, to its restricted trade list for acquiring US chipmaking equipment for Semiconductor Manufacturing International Corporation (SMIC).
They were among 32 entities named by the US Commerce Department, with 23 based in China.
The two companies were cited for obtaining equipment for SMIC Northern Integrated Circuit Manufacturing (Beijing) Corp and Semiconductor Manufacturing International (Beijing) Corporation, both already on the US Entity List.
Shipping US equipment to these SMIC-linked firms requires licenses that are likely to be denied.
Shanghai Fudan Microelectronics Technology, which produces high-performance computing chips, and related companies in China, Singapore, and Taiwan were also added for acquiring US-origin items in support of China’s military modernization and advanced tech sectors.
The US said Shanghai Fudan Microelectronics has supplied technology to Russian military users, triggering an additional restriction.
Entities from India, Iran, Turkey, and the United Arab Emirates were also included in the updated list.
🔗 Source: Reuters
🧠 Food for thought
Implications, context, and why it matters.
Sanctions enforcement reveals increasingly sophisticated circumvention networks
- The targeting of GMC Semiconductor Technology and Jicun Semiconductor Technology shows how Chinese firms are using intermediary companies to bypass existing restrictions on SMIC, which was already on the Entity List1.
- This pattern mirrors earlier enforcement actions, such as the 2018 restrictions on Fujian Jinhua Integrated Circuit Co. for national security concerns, demonstrating how the U.S. has been steadily expanding its semiconductor restrictions over multiple years2.
- The fact that 23 of the 32 newly sanctioned entities are Chinese-based reflects the concentrated focus on China’s semiconductor ecosystem, building on export controls that began escalating significantly in 20223.
Export controls create measurable economic costs for U.S. semiconductor industry
- Previous semiconductor export controls have resulted in a $130 billion loss in market capitalization for affected U.S. semiconductor companies, according to Federal Reserve Bank of New York data3.
- The economic impact is significant given that China accounted for 31.4% of global semiconductor purchases in 2022, making it a critical market that U.S. firms have largely lost access to3.
- U.S. semiconductor firms are struggling to replace Chinese customers, leading to declines in revenue, profitability, and employment in the sector3.
- The ongoing expansion of the Entity List, now including 32 additional entities, suggests these economic costs may continue to mount as the U.S. prioritizes national security objectives over short-term commercial interests.
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