(Adds comment from SMIC)
WASHINGTON, Sept 4 (Reuters) - The Trump administration is
considering whether to add China's top chipmaker SMIC to a trade
blacklist, a Defense Department official said, as the United
States escalates its crackdown on Chinese companies.
A Pentagon spokeswoman said the Defense Department was
working with other agencies to determine whether to make the
move against Semiconductor Manufacturing International
Corporation, which would force U.S. suppliers to seek
a difficult-to-obtain license before shipping to the company.
SMIC said in a statement on Saturday it was "in complete
shock" over the news but was open to communication with U.S.
government agencies in hopes of resolving any misunderstandings.
The Chinese Embassy in Washington did not respond to requests
Earlier this week, the Pentagon made a proposal to place
SMIC on the entity list to the End User Committee, a panel led
by the Commerce Department that also includes the State and
Energy Departments and makes decisions about entity listings, a
person familiar with the matter said. It was not clear whether
the other agencies supported the plan.
The Trump administration has often used the entity list -
which now includes more than 275 China-based firms - to hit key
Chinese industries, from telecoms equipment giants Huawei
Technologies and ZTE over sanction
violations, to surveillance camera maker Hikvision
over suppression of China's Uighur minority.
SMIC is the largest Chinese chip manufacturer but is
second-tier to rival Taiwan Semiconductor Manufacturing Co Ltd
, the industry's market leader. It has sought to build
out foundries for the manufacture of computer chips that can
compete with TSMC.
But it is also facing new restrictions from Commerce that
require Huawei's chip manufacturers to seek U.S. licenses before
producing chips for the telecoms giant, if they rely on U.S.
chipmaking technology. SMIC is one of Huawei's manufacturers.
U.S. companies including Lam Research, KLA Corp
and Applied Materials, which supply key
chipmaking equipment, could be impacted by a potential entity
listing, industry sources said.
While the Pentagon official did not outline the reasons for
the action, SMIC's relationship to the Chinese military is under
scrutiny, another U.S. official and two former officials briefed
on the matter said.
In Saturday's statement, SMIC said it had no ties to the
The administration has increasingly trained its focus on
Chinese companies that bolster Beijing's military. Last month,
the United States blacklisted 24 Chinese companies and targeted
individuals it said were part of construction and military
actions in the South China Sea, its first such sanctions against
Beijing over the disputed strategic waterway.
The Defense Department has released two lists of Chinese
companies in the past few months that it claims are owned or
controlled by the People's Liberation Army. The designation
gives President Donald Trump the authority to place them on an
even tougher blacklist but so far no action has been taken.
(Reporting by Idrees Ali, Alexandra Alper and Karen Freifeld.
Editing by Chris Sanders, Howard Goller and Sonya Hepinstall)