On December 22, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) issued formal notification in the Federal Register of its addition of 77 entities to its Entity List. BIS determined that these entities are “engaging in or enabling activities contrary to U.S. national security and foreign policy interests.” While these listings were effective as of December 18, this notice provides further details on the entities and the rationale for their placement on the Entity List.
Of particular interest, Semiconductor Manufacturing International Corporation Incorporated (SMIC) has been added to the Entity List as a result of China’s military-civil fusion efforts and “evidence of activities between SMIC and entities of concern in the Chinese military industrial complex.” The Entity List designation limits SMIC’s ability to acquire certain U.S. technology by requiring exporters, reexporters, and in-country transferors of such technology to apply for a license to sell to the company. BIS notes that 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 modernization efforts. SMIC and the following 10 related companies have been added to the Entity List:
- Semiconductor Manufacturing International (Beijing) Corporation;
- Semiconductor Manufacturing International (Tianjin) Corporation;
- Semiconductor Manufacturing International (Shenzhen) Corporation;
- SMIC Semiconductor Manufacturing (Shanghai) Co., Ltd.;
- SMIC Holdings Limited;
- Semiconductor Manufacturing South China Corporation;
- SMIC Northern Integrated Circuit Manufacturing (Beijing) Co., Ltd.;
- SMIC Hong Kong International Company Limited;
- SJ Semiconductor; and
- Ningbo Semiconductor International Corporation (NSI).
In addition, BIS has added the following entities to the Entity List for enabling “widescale human rights abuses in China through abusive genetic collection analysis or high-technology surveillance, and/or facilitated the export of items by China that aid repressive regimes around the world”: (i) AGCU Scientech; (ii) China National Scientific Instruments and Materials (CNSIM); (iii) DJI; and (iv) Kuang-Chi Group. The additions to the Entity List also include China Communications Construction Company Ltd. for enabling China to “reclaim and militarize disputed outposts in the South China Sea, which has been detrimental to U.S. national security.” BIS has listed numerous Chinese shipbuilding companies involved in China’s efforts to “assert its unlawful maritime claims in the South China Sea, as well as efforts to intimidate and coerce other coastal states from accessing and developing offshore marine resources.”
Other Chinese companies have been added to the Entity List for their efforts to acquire and attempting to acquire U.S.-origin items in support of programs for the People’s Liberation Army, or efforts to impair U.S. efforts to counter illicit international trafficking in nuclear and other radioactive materials. While these new listings mostly comprise Chinese companies, it should be noted that several entities located in Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, Russia, and the United Arab Emirates (UAE) have also been added to the Entity List for various actions contrary to the national security of the United States.
BIS has clarified that shipments of items removed from eligibility for a License Exception or export or reexport without a license (NLR) to these newly listed entities as a result of this action “that were en route aboard a carrier to a port of export or reexport, on December 22, 2020, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR).”
See also Update of December 18, 2020 for further details and links pertaining to SMIC.