Home Business Pentagon blacklists China chipmaker SMIC and oil producer CNOOC

Pentagon blacklists China chipmaker SMIC and oil producer CNOOC

Aerial view of the Pentagon building photographed on Sept. 24, 2017.

Bill Clark | CQ-Roll Call Group | Getty Images

WASHINGTON — China’s largest chipmaker and national offshore oil and gas producer were added Thursday to a blacklist of alleged Chinese military companies, the Pentagon said in an evening statement.

The Department of Defense designated a total of four companies as being either owned or controlled by the People’s Liberation Army.

  • Semiconductor Manufacturing International Corp.
  • China National Offshore Oil Corp.
  • China Construction Technology Co. Ltd.
  • China International Engineering Consulting Corp.

The additional four companies added Thursday brings the total number of blacklisted firms to 35.

U.S. officials have long complained that Chinese companies are beholden to the People’s Republic of China and collect sensitive information on behalf of the People’s Liberation Army. The Chinese Communist Party has previously said that it does not engage in industrial espionage. 

The Chinese Embassy in Washington did not immediately respond to CNBC’s request for query.

The move will likely escalate tensions between the world’s two largest economies and adds to the list of pressing geopolitical issues awaiting President-elect Joe Biden.

In September, the Pentagon said it was holding discussions over whether SMIC should be added to the Commerce Department’s entity list, which essentially restricts those companies from receiving specific goods made in the United States.

Read more: U.S. sanctions on chipmaker SMIC hit at the very heart of China’s tech ambitions

That same month, the U.S. Commerce Department informed some firms they needed to obtain a license before supplying goods and services to SMIC after concluding there was an “unacceptable risk” that equipment supplied to it could be used for military purposes. SMIC relies heavily on U.S. suppliers.

SMIC is viewed as a major player in China’s effort to boost its domestic semiconductor industry, an ambition that was accelerated by the U.S.-China trade war. Imposing export controls on SMIC would impact U.S. companies that sell chip-making technology to China manufacturers.