Earlier this year in May, reports began emerging that internal discussions from the US government indicate that the Biden administration is considering to impose sanctions against Chinese company Hikvision based on alleged implications arising from its surveillance camera business. According to the same report, the government is looking to place Hikvision onto the OFAC-maintained Special Designated Nationals and Blocked Persons list (SDN list), which will effectively prohibit US persons and companies from transacting with Hikvision, a significant escalation from current measures.
Following initial reports, The Information also published an article, stating that the US government has proposed rules to place more aggressive export control on Chinese semiconductor manufacturers, including the Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor Limited, ChangXin Memory Technologies (CXMT), and Yangtze Memory Technologies Corp (YMTC).
While the SMIC had already been a part of the US’ entity list for nearly 2 years and been the predominant focal point of further export control threats, domestic lawmakers have been consistently demanding more to be done to tighten export controls against the company, with Reuters reporting that a letter had been sent by a group of Republican Senators to Gina Raimondo, Commerce Secretary, on the very matter. According to other sources, the US government had been engaged in similar internal discussions since late last year. However, other mentioned companies, such as the CXMT, and the YMTC, have previously been seldom discussed, showing that there is a possibility where the US is recalibrating its sights to focus on a broader base of China-based semiconductor manufacturers.
In response to the proposed actions to be taken against Hikvision and Chinese semiconductor manufacturers, some other concerns have been expressed regarding the potential of aggressive secondary sanctions enforcement or indirect consequences. Given that Hikvision products are widely used all across the world, and that Chinese-made semiconductors are increasingly embedded in global supply chains, the approach that the US takes towards implementing its sanctions will undoubtedly play an important role on the extent to which China-US tensions will escalate, and the degree of impact that international businesses will take on as a result.
