Chinese smartphone firms Huawei and ZTE have been on the list for several years.
The US Department of Commerce has added dozens of Chinese companies to its “entity list” of companies that may not purchase technology from US companies without a license from the feds. The new list includes DJI, the world’s largest drone manufacturer. It also includes SMIC, a major Chinese chipmaker that has done business with Qualcomm and other Western companies.
This is one of the legal weapons the Trump administration used against smartphone-makers Huawei and ZTE a few years ago. The export ban against those two companies had a devastating effect on the companies because it meant they couldn’t get access to Google software, Qualcomm chips, and other Western technologies.
It’s not clear if the export ban will be as damaging to DJI as it was to Huawei and ZTE. Not only has DJI dominated the drone business for years, but Chinese companies dominate significant parts of the drone supply chain. So DJI might not have as much trouble sourcing components from domestic supply chains. Still, the announcement will certainly make it difficult for DJI to maintain its dominance of the drone business outside of China.
The Trump administration’s other major target is SMIC, a Shanghai company that owns and operates semiconductor foundries. In the past, SMIC has counted Qualcomm, Broadcom, and Texas Instruments among its American customers. When rumors began to circulate about an SMIC export ban a few months ago, Qualcomm reportedly began making plans to shift its semiconductor business away from SMIC. Qualcomm’s biggest foundry partners are Samsung and TSMC, so it likely won’t have too much trouble moving away from SMIC.
The US government’s focus with the SMIC listing is to prevent the Chinese company from getting access to the newest generations of semiconductor fabrication technologies.
“Items uniquely required to produce semiconductors at advanced technology nodes—10 nanometers or below—will be subject to a presumption of denial,” the US wrote in a statement announcing the restrictions. The US is concerned that selling cutting-edge semiconductor equipment to SMIC will allow it to fall into the hands of the Chinese military.