The US Department of Commerce added a dozen Chinese tech companies to its Entity List on Wednesday, citing national security and foreign policy concerns. This continues the “tech decoupling” that was first initiated by the Trump administration.
The 12 blacklisted firms are mainly quantum computing and semiconductor companies. Eight of the Chinese tech companies were sanctioned due to their alleged roles in aiding the Chinese military to develop quantum computing capabilities, according to the statement issued by the US Department of Commerce.
A total of 27 entities and individuals from China, Pakistan, Japan, and Singapore were placed on the Entity List. Potential US suppliers who wish to transact with these companies and individuals must apply for a license before doing business with them.
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The actions will help prevent the diversion of US technologies to China’s military, Secretary of Commerce Gina Raimondo said in the statement. “The Department of Commerce is committed to effectively using export controls to protect our national security,” Raimondo said.
Chinese officials criticized the trade ban and claimed that the US has broadened the concept of national security and arbitrarily introduced sanctions. Shu Jueting, a spokesperson for the Chinese Ministry of Commerce, said on Thursday, adding that the move would harm supply chain security and recovery of the world economy.
The restriction is Washington’s latest move to block China’s access to American cutting-edge technologies. In October, US officials said China has a sweeping national plan to dominate five key technologies, including AI, quantum computing, and semiconductors, and warned companies about the risks of trading with China, The Washington Post reported.
At least seven of the newly restricted firms are partially state-owned, or have ties with state-backed funds, KrASIA found.
China plans to achieve “tech self-sufficiency” and aims to meet 70% of the country’s semiconductor needs by mobilizing domestic suppliers. Nearly all major tech companies in China, including Baidu, Tencent, Alibaba, and Huawei, are developing their own advanced chips for smartphones, AI computation, vehicles, and other uses.
There are cases where Chinese companies on the Entity List still access foreign technology and components, like the country’s largest chip maker, SMIC.
Huawei was put on the Entity List in late 2019, and is now attempting to bypass the sanctions by spinning off business arms and licensing designs to external firms.