* SMIC says it has no ties with Chinese military
* Restrictions mark U.S. policy shift from earlier this year
SHANGHAI/WASHINGTON, Sept 26 (Reuters) - The United States
has imposed restrictions on exports to China's biggest chip
maker SMIC after concluding there is an "unacceptable risk"
equipment supplied to it could be used for military purposes.
Suppliers of certain equipment to Semiconductor
Manufacturing International Corporation will now have
to apply for individual export licenses, according to a letter
from the Commerce Department dated Friday and seen by Reuters.
The latest move marks a shift in U.S. policy from earlier
this year, when applicants seeking military end user licenses
to sell to SMIC were told by the Commerce Department that the
licenses weren't necessary, according to three people familiar
with the matter.
SMIC said it had not received any official notice of the
restrictions and said it has no ties with the Chinese military.
"SMIC reiterates that it manufactures semiconductors and
provides services solely for civilian and commercial end-users
and end-uses," SMIC said.
"The Company has no relationship with the Chinese military
and does not manufacture for any military end-users or
SMIC is the latest leading Chinese technology company to
face U.S. trade restrictions related to national security issues
or U.S. foreign policy efforts. Telecoms giant Huawei
Technologies had its access to high-end chips curtailed
by its addition to a Commerce Department blacklist known as the
"There's been a lot of coverage on the Trump
administration's actions regarding TikTok, but the more
significant action - from a global economic standpoint and that
will have considerable ripple effects through global supply
chains - are the increasing restrictions on SMIC and other
Chinese national champions like Huawei," said Nicholas Klein, a
Washington lawyer who specializes in international trade. He
said these actions are more likely to draw a retaliatory
response from Beijing.
The United States has moved to ban the popular short video
app TikTok, citing national security concerns stemming from its
SMIC's new designation is not as severe as being
blacklisted, which makes it difficult to get any export license
The Pentagon earlier this month, Reuters was first to
report, said it was working with other agencies to determine
whether to blacklist SMIC for its purported links to the Chinese
U.S. companies including Lam Research, KLA Corp
and Applied Materials, which supply chipmaking
equipment, may now need to get licenses to ship certain goods to
It is unclear which suppliers received the letter, but
typically once the Commerce Department comes to the conclusion
that there is a risk of military use or diversion, it sends that
information to the companies.
The Commerce Department's Bureau of Industry and Security
declined on Saturday to comment specifically on SMIC, but said
it was "constantly monitoring and assessing any potential
threats to U.S. national security and foreign policy interests".
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
people 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.
(Reporting by Josh Horwitz, Karen Freifeld and Alexandra Alper;
Writing by Douglas Busvine; Editing by Chris Sanders and Grant