Introduction
The U.S.-China tech war intensified again as Washington blacklisted two Chinese companies accused of supplying restricted U.S. chipmaking tools to Semiconductor Manufacturing International Corporation (SMIC), Chinese largest chip makers. The move is part of a sweeping crackdown designed to block Beijing’s access to cutting-edge semiconductors that could power artificial intelligence (AI), military systems, and advanced computing.
On September 12, 2025, the U.S. Commerce Department added 32 new companies to its Entity List — including 23 in China. Among them were GMC Semiconductor Technology (Wuxi) Co and Jicun Semiconductor Technology, which allegedly acted as intermediaries to funnel restricted U.S. equipment to SMIC subsidiaries already under sanctions.
This action highlights Washington’s resolve to shut down sanctions loopholes and extend restrictions beyond major Chinese chipmakers to their support networks and proxy firms.
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Quick 5-Point Overview
Two Chinese firms blacklisted: GMC Semiconductor Technology and Jicun Semiconductor accused of acquiring U.S. chip tools for SMIC.
SMIC already sanctioned: The firms allegedly supported SMIC Beijing units, which were already on the Entity List since 2020.
Shanghai Fudan Microelectronics hit: Targeted for supporting China’s military modernization and supplying tech to Russia.
Global scope of sanctions: New restrictions include firms in China, Singapore, Taiwan, India, Iran, Turkey, and the UAE.
Geopolitical impact: Move escalates the U.S.-China semiconductor war, raising risks for global supply chains and equipment makers.
Why SMIC Is at the Center of U.S. Sanctions
SMIC, headquartered in Shanghai, is Chinese largest contract chip manufacturer and plays a strategic role in Beijing’s semiconductor self-sufficiency push. Since 2020, it has been on the U.S. Entity List, restricting its access to advanced U.S. technology.
Yet despite restrictions, SMIC reportedly produced 7nm-class chips for Huawei smartphones, alarming U.S. policymakers who believed export controls would halt such breakthroughs. This achievement reinforced fears that American technology was still leaking into China’s semiconductor ecosystem, often through third-party suppliers.
By penalizing GMC and Jicun, the U.S. is closing off SMIC’s indirect access routes. Any U.S. company exporting chipmaking tools must now ensure they are not resold or diverted via proxy firms.
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Shanghai Fudan Microelectronics: Another High-Profile Target
Another major sanction in this round was Shanghai Fudan Microelectronics Technology Co, known for producing high-performance computing chips.
According to the U.S. Commerce Department, Fudan was blacklisted for:
- Supporting China’s military modernization efforts.
- Participating in advanced computing and integrated manufacturing sectors.
- Supplying technology to Russian military end users.
The U.S. added extra restrictions on Fudan to prevent any possible backdoor transactions, signaling its intent to cut the company off from global technology flows.
This reflects a wider U.S. strategy of targeting companies that not only serve China’s AI and defense sectors but also support Russia’s war-related industries.
Beyond China: A Global Blacklist
The September sanctions go beyond Chinese firms. Entities in India, Iran, Turkey, and the United Arab Emirates were also blacklisted, highlighting Washington’s concerns about global networks that help China and Russia bypass restrictions.
This expansion shows that the U.S. is no longer focused only on direct suppliers to SMIC or Huawei but also on third-country intermediaries that may act as middlemen in the semiconductor gray market.
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Implications for the Semiconductor Industry
1. Stricter Scrutiny for U.S. Equipment Makers
American equipment giants like Applied Materials, Lam Research, and KLA now face even tighter compliance requirements. They must track how their machines are resold and ensure they do not reach blacklisted entities via indirect channels.
2. Pressure on Chinese Tech Firms
For Chinese chipmakers, the blacklist expands the choke points already squeezing their access to advanced equipment. While China has been investing heavily in domestic lithography and semiconductor tools, the gap with Western technology remains wide.
3. Supply Chain Risks
With 32 new entities banned, the risk of supply chain fragmentation grows. Global firms in Singapore, Taiwan, and India caught in the sanctions web may face operational and legal challenges, adding friction to cross-border trade.
4. Retaliation Possibility
China has in the past retaliated against U.S. sanctions with measures such as rare earth export restrictions. Analysts warn that further escalation could hurt American companies operating in China, including Apple, Tesla, and Intel.
5. Military and AI Dimensions
At its core, the U.S. sees semiconductors as dual-use technology — crucial for both civilian and defense applications. By tightening export controls, Washington is aiming to slow China’s AI and military chip progress, even if it causes short-term disruptions in global markets.
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The Bigger Picture: Semiconductor Tech War Escalates
The U.S. sanctions reflect a broader geopolitical struggle over who controls the future of semiconductors. Chips are the backbone of AI, quantum computing, and defense technologies, making them central to national security.
- For China: SMIC represents the spearhead of its $150 billion investment in building a self-reliant semiconductor ecosystem.
- For the U.S.: Restricting SMIC and related firms is about preserving American leadership in advanced chips and blocking their use in rival military systems.
- For the world: The semiconductor supply chain is becoming increasingly fragmented, forcing companies and governments to choose sides in the U.S.-China rivalry.
Conclusion:
The U.S. decision to sanction GMC Semiconductor Technology and Jicun Semiconductor Technology marks a new phase in the semiconductor sanctions regime. Washington is no longer just targeting flagship companies like SMIC but also small intermediaries that help them acquire critical technology.
With 32 new entities blacklisted worldwide, the crackdown is becoming a global campaign, reshaping the semiconductor supply chain. While this strategy may slow China’s access to advanced tools, it also raises risks of retaliation, trade disruptions, and long-term fragmentation of the global tech order.
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