SMIC and Huawei Under Congressional Scrutiny

image

SMIC and Huawei Under Congressional Scrutiny

Michael McCaul, Chairman of the House Foreign Affairs Committee and a leading Republican figure, has called on the U.S. Department of Commerce to investigate China’s Semiconductor Manufacturing International Corp (SMIC) for potentially violating U.S. export control laws. In a letter dated November 4, McCaul expressed concerns that SMIC is illegally manufacturing chips for the Chinese telecommunications giant Huawei, which is already under U.S. sanctions.

McCaul voiced bipartisan frustration over the lack of action by the Bureau of Industry and Security (BIS), a division of the Department of Commerce, regarding reports related to Huawei's attempts to evade U.S. export controls. He urged the Department of Commerce to conduct a comprehensive audit of SMIC’s facilities and financial records. Should China fail to cooperate, McCaul recommends suspending all existing licenses for SMIC.

The congressman cited recent developments involving SMIC, such as the production of an advanced chip for a Huawei smartphone and the expectation to manufacture over one million artificial intelligence processors for the company, as evidence of violations. According to McCaul, these advances could potentially enable China to surpass the U.S. in the field of artificial intelligence.

The Department of Commerce confirmed receipt of McCaul's letter and stated it would respond through appropriate channels. The Department has previously defended its stance against China, claiming to exhibit the toughest approach in history against the country's trade practices.

China's embassy in Washington criticized "some U.S. politicians" for exaggerating national security concerns and politicizing economic, trade, and technological issues.

SMIC was placed on the Department of Commerce’s Restricted Trade List in 2020 over allegations of connections to the Chinese military-industrial complex. Huawei was added to the same list in 2019 due to accusations of sanction violations. Both companies have denied any allegations of wrongdoing.

Being on the Entity List typically prevents those firms from receiving U.S. shipments. However, under rules established by the Trump administration, companies could still obtain licenses to send billions of dollars' worth of U.S. goods and technology to Huawei and SMIC.