The United States Department of Commerce has revised its Entity List for businesses (or people) that are deemed a threat to national security and has added 77 new entities to the list. Among them are drone maker DJI and Chinese semiconductor giant Semiconductor Manufacturing International Corporation (SMIC). With their inclusion on the list, US companies are effectively banned from providing (read: export, re-export, and transfer) their technology to DJI and SMIC owing to license restrictions imposed on the two companies under the Export Administration Regulations of BIS (Bureau of Industry and Security).
DJI is accused of enabling a humanitarian crisis
Starting with DJI, its inclusion on the Entity List has less to do with the national security risk, and is more about facilitating a human rights abuse. The latest “Addition, Revision and Removal of Entities from the Entity List” release mentions that DJI “enabled wide-scale human rights abuses within China through abusive genetic collection and analysis or high-technology surveillance.”
This is likely in reference to the deployment of DJI drones for surveillance activities in connection with the suppression of Uyghurs – a primarily Muslim ethnic minority group – in the Xinjiang region of China. You can read about DJI’s alleged involvement in the ongoing humanitarian crisis in this lengthy Bloomberg Businessweek report here.
As for SMIC’s inclusion on the list, the US Department of Commerce’s press release cites SMIC’s ties with the Chinese military as the reason behind blacklisting it. “This action 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.”
SMIC has been blacklisted over its close ties with Chinese military
“Between SMIC’s relationships of concern with the military industrial complex, China’s aggressive application of military civil fusion mandates and state-directed subsidies, SMIC perfectly illustrates the risks of China’s leverage of U.S. technology to support its military modernization,” Commerce Secretary Wilbur Ross said regarding the US government’s latest move.
He added that the restrictions ensure that SMIC can be prevented from supporting what the US government classifies as China’s destabilizing military activities. For some added context, state-owned civilian and military telecom equipment supplier Datang Telecom Group is a major shareholder of SMIC, while Qualcomm and Broadcom are among its major customers.