Karen Freifeld

(Reuters): A top Republican lawmaker has accused the Biden administration of not doing enough to prevent China’s Semiconductor Manufacturing International Corp (SMIC) from strengthening the country’s chip industry and military-industrial sophisticated.

Michael McCaul, chairman of the House Foreign Affairs Committee, urged U.S. Commerce Department agents to visit SMIC facilities and investigate whether the company is illegally producing chips for Huawei, a sanctioned telecommunications company considered the domestic leader of China’s chip industry.

In a Nov. 4 letter seen by Reuters, McCaul described what he called “growing bipartisan frustration” with the Commerce Department’s Bureau of Industry and Security (BIS) failing to act on reports of Huawei’s efforts to to circumvent US export controls.

“There is mounting evidence that SMIC is violating U.S. export control laws,” McCaul wrote to BIS, led by Secretary Alan Estevez. If China does not immediately agree to a “comprehensive audit of all SMIC facilities and their books,” McCaul said, “BIS should suspend all existing licenses for SMIC.”

McCaul said SMIC’s breakthroughs – including an advanced chip in Huawei’s smartphone and the expected production of more than a million AI processors for Huawei – represent a “smoke shot” for the breach and could aid China overtake the U.S. in artificial intelligence.

The Commerce Department said it received McCaul’s letter and would respond “through appropriate channels.” Last week, in response to similar criticism, it said no Commerce Department had been tougher on China.

SMIC did not immediately respond to requests for comment, nor did Huawei.

China’s embassy in Washington said in a statement that “some U.S. politicians” are “overstretching the concept of national security” and politicizing “science and technology and economic and trade issues.”

In 2020, SMIC was added to the Department of Commerce’s Restricted Trade List due to alleged ties to China’s military-industrial sophisticated. A year earlier, Huawei was on the list after allegedly violating sanctions. Both companies previously denied any wrongdoing.

Being on the “entity list,” as it is called, typically prevents shipments from the U.S. to targeted companies. But when the Trump administration added Huawei and SMIC, their rules allowed exporters to obtain licenses to ship billions of dollars worth of U.S. goods and technology to them.