Cold War Update: Trade Blacklist Adds 7 Chip Companies

Washington alleges the companies have ties to the Chinese military.
CapitalWatch StaffApr 08,2021,16:14

Biden's blacklist is getting bigger as he continues the previous president's blacklist of certain Chinese companies.

In late 2020, the Trump administration had cut off China’s largest chipmaker, Semiconductor Manufacturing International Corp. (SMIC), among dozens of Chinese companies, from U.S. technologies citing purported military use. Now, President Joe Biden follows the pattern of his predecessor: On Thursday, the U.S. Department of Commerce added seven Chinese supercomputing entities to the blacklist.

These companies are, as listed by Reuters: Shanghai-listed Tianjin Phytium Information Technology, Shanghai High-Performance Integrated Circuit Design Center, Shenzhen-listed Sunway Microelectronics, the National Supercomputing Center Jinan, the National Supercomputing Center Shenzhen, the National Supercomputing Center Wuxi, and the National Supercomputing Center Zhengzhou.

The widening of the blacklist sent the stock in TSMC (NYSE: TSM), the world’s largest chip foundry based in Taiwan, up 3% by midday in New York, to $123.33 per share. The company has been expanding aggressively even as it had lost some big Chinese clients, namely, Huawei Technologies, choosing the U.S. side over China.

Meanwhile, some blacklisted companies may yet have a chance. Inspired by Xiaomi’s temporary federal court win against the investment ban imposed by former President Trump, some Chinese companies are seeking to challenge the blacklist.

‘Territorial Integrity'

Next week, the U.S. Senate is to decide on the Strategic Competition Act of 2021, a draft bipartisan legislation aimed at pushing back against Beijing’s “aggressive and assertive behavior,” Reuters also reported. Among other things, China’s handling of the Uighurs and Hong Kong protest will be addressed. The hearing on the proposed legislation is scheduled for April 14, where the Senate Commerce Committee will also decide on boosting R&D with $110 billion in funds over the next five years.

On Thursday, China’s foreign ministry spokesperson Zhao Lijian stated, as cited by state-owned Xinhua News, "China has never intended to intimidate others, but it is not afraid of any intimidation. China does not want to coerce anyone, but it is useless to coerce China.” The remark was made in response to U.S. State Department spokesperson Ned Price's accusations of China’s intimidation as the U.S. pledged its support of Taiwan.

Zhao also said, "China has the firm will and the ability to defend its sovereignty and territorial integrity.”

Earlier this week, news of a potential boycott of the Olympic Games in China were rebutted by the State Department.