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US hardens China stance with yet more blacklists

The US government has added Chinese memory chipmaker YMTC and 21 other "major" players in the Asian superpower's artificial intelligence (AI) chip industry to a trade blacklist, broadening its crackdown on high-tech firms based in China.

YMTC, long in the crosshairs of the US government, was added to the list over fears it could divert American technology to previously blacklisted Chinese tech giants Huawei and Hikvision.

The move, laid out in the Federal Register, will bar YMTC's suppliers from shipping US goods to it without a difficult-to-obtain license.

The 21 Chinese AI chip entities being added to the trade blacklist, which include Cambricon Technologies Corp and CETC, face an even tougher penalty, with the US government effectively blocking their access to technology made anywhere in the world with American equipment.

As the Chinese government seeks to remove barriers between its military and civilian sectors, "US national security interests require that we act decisively to deny access to advanced technologies,” Assistant Secretary of Commerce for Export Administration Thea Kendler said.

YMTC, Cambricon, CETC and the Chinese Embassy in Washington did not immediately respond to requests for comment.

The move builds on sweeping export controls imposed on Beijing in October to slow Beijing's technological and military advances, including measures to curb China's access to US chipmaking tools and cut it off from certain chips made anywhere in the world with US equipment.

It also comes as Congress prepares to finalize legislation to bar the U.S. government from buying products that contain semiconductors made by YMTC, Chinese memory chipmaker CXMT or China's top chip manufacturer SMIC.

The Commerce Department on Thursday also targetted nine Chinese entities for allegedly seeking to support China's military modernization, including Shanghai Micro Electronics Equipment Group (SMEE), China's only lithography company. A total of 35 Chinese entities were added to the trade blacklist, as well as YMTC's Japan-based subsidiary.

Not all bad for Beijing

The Biden administration removed Wuxi Biologics, a company that makes ingredients for AstraZeneca's COVID-19 vaccine, and 25 other Chinese entities from the so-called "unverified" list thanks to successful site visits, including Wuxi Biologics earlier this year.

Wuxi did not immediately respond to a request for comment.

Companies are added to the unverified list if the United States cannot complete on-site visits to determine if they can be trusted to receive sensitive technology exports, inspections which in China require approval from the commerce ministry.

Being added to the unverified list forces US suppliers to perform greater due diligence before shipping to the targeted companies.

Commerce Department officials have attributed greater cooperation from Beijing in site checks to a new rule announced in October. Under that rule, if a government prevents US officials from conducting site checks at companies on the unverified list, Washington may add them to the entity list after sixty days.

Under that new policy, the Commerce Department removed nine Russian entities from the unverified list and added them to the entity list because the US has been unable to conduct site visits.

Senate Democrat Chuck Schumer heralded the imposition of new penalties.

"YMTC poses an immediate threat to our national security, so the Biden Administration needed to act swiftly to prevent YMTC from gaining even an inch of a military or economic advantage,” he said.

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