China's SMIC Should Be Subject to Tighter Export Controls, Lawmakers Say

March 22, 2021 |Congress

The Commerce Department should expand export restrictions on China’s top chipmaker to prevent it from accessing a broader range of semiconductor manufacturing equipment, two U.S. lawmakers said. In a March 18 letter to Commerce Secretary Gina Raimondo, Sen. Marco Rubio, R-Fla., and Rep. Michael McCaul, R-Texas, asked the agency to apply the foreign direct product rule to China’s Semiconductor Manufacturing International Corporation, which would restrict the company’s ability to import certain foreign-made semiconductor equipment that is built with or that incorporates U.S. technology. The move would subject SMIC to similar restrictions imposed by the Bureau of Industry and Security on other Chinese companies on the Entity List, including Huawei (see 2012210044).

“Because of its designation as a Chinese Communist Party military company and integration into the defense establishment of the [People’s Republic of China] and its national strategy for military-civil fusion, SMIC is a clear threat to U.S. national security,” Rubio and McCaul said. “It is in the U.S. national security interest to prohibit the transfer of goods that might support SMIC’s production of semiconductors.” A BIS spokesperson said the agency is aware of the letter.

The lawmakers said they are especially concerned about sales of “deep ultraviolet lithography” (DUV) tools, which are used to mass produce advanced semiconductor chips. They asked Commerce to work with allies to persuade them against selling those items to SMIC, and suggested that BIS consider designating DUV tools as an export-controlled foundational technology, a set of controls BIS has been working on since 2018 (see 2008260045 and 2012230069). They also asked Commerce to provide copies of “all license decisions” related to SMIC since its December placement on the Entity List (see 2012180039). “We must ensure that SMIC is unable to access vital semiconductor manufacturing equipment from any location in the world,” the lawmakers said.