China’s largest chipmaker Semiconductor Manufacturing International Corp (SMIC) has been subjected to additional export restrictions by the US Bureau of Industry and Security over unacceptable risks that equipment supplied to it could be used for military purposes. Credit: Handout.

As a global chip shortage starts to bite deep, it appears that US businesses are not quite ready to give up on the Chinese market.

The US Commerce Department greenlighted more than US$100 billion worth of export licenses for semiconductors and other products to suppliers of Huawei Technologies Co. and another blacklisted Chinese tech company, despite their being on a US trade blacklist, The Wall Street Journal reported.

The Commerce data, released Thursday by a Republican member of Congress, shows the department granted 113 export licenses worth about $61 billion for suppliers of telecom giant Huawei and 188 licenses valued at $42 billion for suppliers of Semiconductor Manufacturing International Corp. (SMIC), from Nov. 9, 2020, through April 20 this year.

The department’s Bureau of Industry and Security said in a disclosure to the House Foreign Affairs Committee that the licenses were issued under a policy developed during the Trump administration and continued under the Biden administration, Bloomberg reported.

Representative Michael McCaul, the top Republican on the committee, said in a statement that he was releasing the information in a bid for openness and said that the granting of licenses, along with recent reports about the Chinese government’s hypersonic weapons program, mean that there should be “more transparency and stricter enforcement when it comes to export controls.”

“Export controls are fundamental in restricting the transfer of technology and goods to our adversaries,” McCaul said.

“The recent reports regarding China’s hypersonic program — that has likely been supported by US technology — is another frightening wake-up call.”

The data also showed that more than 9 out of 10 license applications were granted to SMIC suppliers while 69% of requests to ship to Huawei were approved over the same period, Reuters reported.

The numbers could anger some China hawks in Washington who have made a concerted effort to deprive Chinese companies of access to advanced US technology.

SMIC is the largest chipmaker in China. This company is also on the US blacklist just like Huawei. 

According to Florida Republican Senator Marco Rubio, President Joe Biden needs to explain the reason behind these companies continuing to receive “waivers.”

The GOP heavy hitter added, “It is just another example of President Biden not taking the economic and security threat posed by the Chinese Communist Party seriously.”

According to online wire agencies, both companies have outrightly declined to comment on the release of US government data. 

[T]he Commerce Department said that the release of an “arbitrary snapshot” of license approvals “risks politicizing the licensing process and misrepresenting the national security determinations” made by the government.

It also stressed that approved license applications do not represent actual shipments and around half of all licenses are used. It added that license applications involving Huawei and SMIC are processed under policies developed by the Trump administration and maintained by the Biden administration, Reuters reported.

A former senior Commerce Department official in the Trump administration who declined to be named echoed the agency’s view.

“This very small period of license activity is not an accurate window into the Huawei and SMIC license process,” he said, noting that the goal of preventing the companies from obtaining leading edge technology without unnecessarily harming US exports of other goods had been successful.

“This [document release] seems designed to mislead people and generate headlines,” he added.

Sources: Reuters, The Wall Street Journal, Bloomberg, Financial Post, Slashdot, GizChina.com