China’s largest chipmaker has hired its first lobbying firm just as the Donald Trump administration announced export restrictions on the company.
Washington giant Akin, Gump, Strauss, Hauer & Feld will lobby on the “eligibility” of the Semiconductor Manufacturing International Corporation (SMIC) “to import US-origin semiconductor-related goods under US export control laws,” according to a new lobbying filing. The registration was effective Sept. 16.
Registered on the account are Hal Shapiro, a former senior White House adviser for international economic affairs under President Bill Clinton; former Senate Finance Committee trade counsel John Gilliland; and Matt Hawkins, a former intern for Rep. Michael McCaul (R-Texas), who heads House Republicans’ China Task Force. Hawkins and Shapiro also lobby for Chinese telecommunications company ZTE.
Disclosure of the lobbying agreement comes just days after the Commerce Department sent a Sept. 25 letter to US companies warning them that exports to SMIC posed an “unacceptable risk of diversion to a military end use,” the Financial Times reported over the weekend. Headquartered in Shanghai, the partially state-owned company is the largest foundry in China. Its customers include Qualcomm and Broadcom.
The restrictions are less severe than those facing Huawei and some other Chinese technology companies. But they could still have a considerable impact on a company that is estimated to import about about half of its equipment from the United States.
“It all depends on how the US implements this,” Paul Triolo, head of technology policy analysis at the Eurasia Group, told the Times. “In the worst case scenario, SMIC is completely cut off, which would severely set back China’s ability to produce chips. This would be a tipping point for US-China relations.”
In a statement to Bloomberg, SMIC said it had no links to the Chinese armed forces and did not manufacture goods for military end-users. The news agency described the export policy as a compromise between the departments of Defense and Commerce.
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The restrictions come amid increasing US pushback against China’s growing technological clout, which Washington asserts was attained in part through technological theft and presents risks to US national security. On Wednesday the Republican China Task Force released a list of recommendations that includes efforts to bring semiconductor production back to the United States.
“This filing is dated less than two weeks after the Trump administration first hinted that it was going to add SMIC to a trade blacklist,” said Craig Singleton, an adjunct fellow on China at the hawkish Foundation for Defense of Democracies in Washington. “This filing, along with those for ByteDance and Tencent, demonstrate a consistent pattern — when Chinese companies face increased regulation, they will resort to weaponizing our own regulatory and legal frameworks in an attempt to both defend and in some cases normalize their unethical and/or illegal business practices. Of course, American companies are not afforded any of the same protections in China.”
SMIC joins chipmaker Fujian Jinhua Integrated Circuit Co. among the Chinese technology companies that have hired lobbyists to help navigate US export restrictions. Fujian Jinhua has been lobbying since last year after being cut off from US suppliers amid accusations that it stole intellectual property from a US company.
The US crackdown has also entangled other foreign semiconductor companies that have close business ties with China. The Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker and a major provider to Huawei, has stepped up its lobbying, as has the US subsidiary of South Korea’s SK hynix.
Update: This post was updated at 8:30 p.m. on Oct. 1 with comment from FDD’s Craig Singleton.