Trump’s parting blows to China strike chipmaker SMIC

With little over a month before president-elect Joe Biden steps into office, current US president Donald Trump has dealt yet another blow to China, blacklisting SMIC and further hampering their semiconductor industry. 

 

Earlier this month, Trump signed an executive order that restricted US companies from investing in Chinese firms owned or controlled by the military. In this first wave of blacklisting, 31 companies were named, including China Mobile and China Telecom.

 

Now, reports suggest that SMIC is set to be added to the list, as well as offshore oil and gas giant China National Offshore Oil Corp (CNOOC), due to supposed military ties. 

 

SMIC, naturally, has denied these claims, arguing that the company operates entirely independently from the military. “The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses,” said the company in a statement. 

 

While this will be a major blow to SMIC, which – like so many Chinese semiconductor firms – has a heavy reliance on US technology, it is unlikely to be crippling. US investment in the company was already limited,  while the Chinese government itself is ramping up investment in the industry, hoping to overcome its reliance on US goods in the new future. 

 

Nonetheless, this is another painful blow, maintaining the same high tension between China and the US that has been present throughout the year. China has expressed optimism that the inauguration of Joe Biden will lead to a softening of relations between the two countries, though analysts from East and West are more cynical – Biden has previous expressed his own support for a hard stance against China, and moves like this growing blacklist from Trump will mean the new president will have even more legislative entanglement to unpick if relations are to cool. Right now, the best both sides can hope for seems to be a more constructive and less inflammatory dialogue.  

 

That said, we should remember that Trump still has over a month left in office. This may not be the last shots his administration takes against China, with rumours last week suggesting that the government was close to adding 89 Chinese aerospace companies to the list.