Tech war: US trade watch list throws 31 Chinese semiconductor-related entities into uncertainty as harsher sanctions loom
- Further trade restrictions could be on the cards for a number of Chinese semiconductor-related entities recently put on the US Unverified List
- Under updated regulations, Washington may add a number of these Chinese parties to the US trade blacklist to face sanctions
None of the Chinese companies and institutions added to the UVL – including Vital Advanced Materials, Beijing PowerMac Co, the University of the Chinese Academy of Sciences, and the University of Shanghai for Science and Technology – have so far made any public comment on the US action or on what they plan to do next.
While Naura downplayed the US action by stating that its subsidiary accounted for only 0.5 per cent of its total annual revenue, its shares were down 10 per cent for the second consecutive day on Tuesday on the back of that news.
The whole Chinese semiconductor industry is now being targeted by the US government, according to Gu Wenjun, chief analyst at research firm ICwise, in a note on Tuesday.
“The US had cited grand excuses to justify its past actions,” Gu wrote. “It cited information security [risks] to target Huawei and military links to target SMIC.”
Gu indicated that the US government has been pushing beyond “the red lines”, adding that it has expanded “the list of sanctioned Chinese businesses … using all sorts of strange reasons”.
The US government can cite “persistent lack of cooperation by the host country” – in this case, China – as a “refusal to cooperate and misrepresentation by the subject”, paving the way for harsher trade restrictions to be imposed, Kevin Cai Kaiming, a senior partner at multinational law firm Dentons, said in a note on Monday.
While this is not the first time that dozens of Chinese entities have been put on the UVL, compliance with the BIS verification process has resulted in nine mainland firms being recently removed from the US trade watch list.
Most companies on the UVL “can be successfully removed” from the list once an end-user check is conducted, according to Lindsay Zhu Ju, a Shanghai-based partner at international law firm Squire Patton Boggs.
“The 31 Chinese companies [recently added to the UVL] are recommended to immediately communicate with [China’s Ministry of Commerce] to arrange end-user checks” by the BIS, said Zhu, who has had experience in handling similar cases.
China’s Ministry of Commerce has described the US government’s move to add more mainland entities to the UVL as “a typical act of technology bullying”.
The ministry said China strongly opposes Washington’s action, which could “seriously jeopardise normal trade [relations] between Chinese and US businesses … and gravely endanger global supply chain stability”.