The Department of Commerce is adding almost 80 companies, most of which are Chinese, including China's largest semiconductor foundry, the Semiconductor Manufacturing International Corporation, to a trade blacklist out of concerns over national security, Commerce Secretary Wilbur Ross confirmed Friday.
"What this is all about is these are companies that are tied to the People's Liberation Army," Ross told Fox Business' Maria Bartiromo.
According to a statement from the U.S. government, the order includes companies that "enable human rights abuses, entities that supported the militarization and unlawful maritime claims in the South China Sea, entities that acquired U.S.-origin items in support of the People's Liberation Army's programs, and entities and persons that engaged in the theft of U.S. trade secrets."
"There are 77 names that have been put on the list, of which 11 are related to Semiconductor Manufacturing International Corp.," Ross said, specifying that the additions include 49 other Chinese companies and 17 from countries other than China for similar national defense reasons.
"This brings the grand total on the entity list to 689 companies, of which 296 are Chinese," said Ross. "And 150 of those are related to Huawei, the big 5G company."
The block will restrict companies from exporting U.S. technology to the firms on the list without having a license, reports The Wall Street Journal. It also has a provision to stop SMIC from getting the technology to build chips that have circuits that are 10-nanometers or smaller.
Friday morning's action has "nothing to do" with the issue of stock trading, Ross told show host Maria Bartiromo after she asked him if the Treasury Department is "watering down" an order from President Donald Trump that prohibits American investments in businesses tied to China's military.
The Journal also reported Monday that government leaders are fighting over how broad that investment list should be.
Ross said Friday's action was taken by the Department of Defense.
"What this has to do with is their access to very advanced semiconductor products," said Ross. "The smaller the number of nanometers inside, the more power is available for other things, so it's very important to get to a smaller size."
He added that the cutoff in the ban is at 10 nanometers, because from there, "you can modify the equipment to make them as small as 7 [nanometers]."
He conceded that the incoming Joe Biden administration could revoke the new orders and actions.
"For example, we have put them on the list this morning, the SMIC, with the presumption of denial if someone applies for a license," said Ross. "A new administration could change that, but I would be very surprised given the Hunter Biden controversy, I would be very surprised if the Biden administration could be all that lenient on China, but the fact is that it's a real national security risk if they did."
According to Reuters, which first reported the blocks, China's foreign minister said the blacklisting is evidence of the United States' moves to oppress Chinese companies and that the government will take "necessary measures" to protect its rights. After the news broke, shares in the top chipmaker dropped 5.2% Friday in Hong Kong.
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