Senators argue the Semiconductor Manufacturing International Corporation, one of the Chinese Communist Party’s “national champions,” presents a clear threat to U.S. national security and economic security
WASHINGTON—United States Senators Bill Hagerty (R-TN) and Tom Cotton (R-AR) have sent a letter to U.S. Secretary of Commerce Gina Raimondo urging her to strengthen export controls with regard to the Semiconductor Manufacturing International Corporation (SMIC), a semiconductor foundry company in China that is one of the Chinese Communist Party’s “national champion” chipmakers.
“SMIC has strong ties with the People’s Liberation Army (PLA). In light of the Chinese Communist Party’s Military-Civil Fusion strategy, SMIC should be treated as part of the PLA. Indeed, SMIC-produced semiconductors are undoubtedly integral parts of the Chinese military’s advanced weapon systems. Moreover, SMIC reportedly will partner with Huawei, another Chinese telecommunications company designated on the U.S. Entity List, to build a semiconductor manufacturing plant worth over $10 billion in mainland in an effort to blunt the effects of U.S. export controls and sanctions,” the Senators wrote.
Hagerty and Cotton are requesting updates from the Secretary on this proposal that they believe would close an important loophole and prevent the Chinese Communist Party and the People’s Liberation Army from using U.S. technology to advance their own military modernization programs.
As the Wall Street Journal reported in December 2021, U.S. officials continue to debate “a Defense Department proposal to close regulatory loopholes that have allowed Semiconductor Manufacturing International Corp. to purchase critical U.S. technology, the people said. SMIC, as the company is known, has been able to continue buying U.S. tools to make chips despite its inclusion on the Commerce Department’s entity list, which is designed to limit access to key U.S. exports.” The report added: “The Defense Department, with the support of officials at the State and Energy Departments, as well as the National Security Council, wants to change the wording to restrict SMIC’s access to items ‘capable of’ producing semiconductors with 14-nanometer circuits and smaller, the people familiar said, broadening the list of items SMIC won’t be able to get.”
A copy of the letter can be found here and below:
Dear Madam Secretary:
Multiple news reports suggest that the Biden Administration, at the request of the Departments of Defense and State, is considering strengthening export controls with regard to the Semiconductor Manufacturing International Corporation (SMIC), a semiconductor foundry company in China that the Department of Commerce added to the Entity List in December 2020.
We welcome this news because SMIC presents a clear national security threat to the United States and our allies and partners. SMIC has strong ties with the People’s Liberation Army (PLA). In light of the Chinese Communist Party’s Military-Civil Fusion strategy, SMIC should be treated as part of the PLA. Indeed, SMIC-produced semiconductors are undoubtedly integral parts of the Chinese military’s advanced weapon systems. Moreover, SMIC reportedly will partner with Huawei, another Chinese telecommunications company designated on the U.S. Entity List, to build a semiconductor manufacturing plant worth over $10 billion in mainland in an effort to blunt the effects of U.S. export controls and sanctions.
Therefore, we were disheartened that these very same news reports also stated that the Department of Commerce itself was blocking a key proposed change to the December 2020 SMIC entity listing. In specific, this proposed change would strengthen export controls by replacing the phrase “uniquely required” with “capable of producing.” Making such a change would close an important loophole and prevent the CCP and PLA from using U.S. technology to advance its military modernization programs. These programs and systems have the potential to be used in a conflict with the United States, Taiwan, and other allies and partners.
Given these press reports, and the impending interagency deliberations, we seek your views, on the following:
(1) Please characterize your understanding of SMIC’s relationship with the CCP and PLA.
(2) Please characterize your understanding of China’s Military-Civil Fusion strategy.
(3) Do you support replacing the phrase “uniquely required” with “capable of producing” in the December 2020 SMIC entity listing?
(4) Do you support applying the Foreign Direct Product Rule (FDPR) to SMIC?
Given the pace at which the interagency appears to be moving, we appreciate your prompt reply to our questions. Thank you for your attention to these important matters of national security.
Sincerely
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