The Donald Trump administration has added SMIC, China’s top chipmaker, to a blacklist of alleged Chinese military companies, Reuters reported.
The move by the Department of Defense brings the total number of companies blacklisted to 35. While the list did not initially trigger any penalties, a recent executive order issued by Republican President Donald Trump will prevent U.S. investors from buying securities of the blacklisted firms starting late next year.
SMIC said in a stock market statement that it strongly opposes the decision of United States Department of Defense, which reflects a fundamental misunderstanding by the U.S. administration regarding the end-uses of its business and technology.
SMIC also said there is no major impact of its addition to the list. SMIC’s Hong Kong shares will resume trading in the afternoon after it was suspended earlier on Friday.
SMIC, which relies heavily on equipment from U.S. suppliers, was already in Washington’s crosshairs. In September, the U.S. Commerce Department informed some firms they needed to obtain a license before supplying goods and services to SMIC after concluding there was an “unacceptable risk” that equipment supplied to it could be used for military purposes.
The list of “Communist Chinese Military Companies” was mandated by a 1999 law requiring the Pentagon to compile a catalog of companies “owned or controlled” by the People’s Liberation Army, but the DOD only complied it in 2020. Giants like Hikvision, China Telecom and China Mobile were added earlier this year.
In November, the White House published an executive order that sought to give teeth to the list by prohibiting U.S. investors from buying securities of the blacklisted companies from November 2021.