On December 18, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a brief press statement announcing that it has “added” more than 60 entities to the Entity List, including Chinese company Semiconductor Manufacturing International Corporation (SMIC), in order to “protect U.S. national security.” The Chinese companies include entities that enable human rights abuses, supported the militarization and unlawful maritime claims in the South China Sea, acquired U.S.-origin items in support of the People’s Liberation Army’s programs, and engaged in the theft of U.S. trade secrets. Regarding SMIC, BIS noted that the listing “stems from China’s military-civil fusion (MCF) doctrine and evidence of activities between SMIC and entities of concern in the Chinese military industrial complex.” BIS also stated that the United States “will not allow advanced U.S. technology to help build the military of an increasingly belligerent adversary.” U.S. exporters will be required to apply for a license in order to sell and ship items, software and technology to SMIC and these other entities on the BIS Entity List. BIS specifically stated that “[i]Items uniquely required to produce semiconductors at advanced technology nodes—10 nanometers or below—will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military-civil fusion efforts.”

SMIC’s has come under scrutiny by U.S. export enforcement and national security agencies for the past few months. The Department of Defense recently announced that the company operates as one of many “Communist Chinese military companies” (see Update of December 7, 2020) and on November 12, 2020 President Trump issued an Executive Order prohibiting U.S. investment in such companies (see Update of November 24, 2020).

Thompson Hine LLP will report further on this development once BIS issues a formal Federal Register notice regarding this action.