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Illustration: Aïda Amer/Axios

The Trump administration's campaign against TikTok gets all the headlines, but the U.S. move last week to place restrictions on Semiconductor Manufacturing International Corp. (SMIC), China's top chipmaker, could end up making a greater difference.

Why it matters: Semiconductor analysts say SMIC represented China's strongest bid to build a domestic chip industry and bolster its tech independence. Sanctions that cut off its access to advanced manufacturing and testing equipment from the U.S. could seriously set that effort back.

Driving the news: The Commerce Department sent a letter Friday to U.S. semiconductor firms telling them they would need licenses to export some kinds of equipment to SMIC because anything they sold the company might be subject to "diversion to a military end use."

  • SMIC denies any relationship with China's military.

Between the lines: The SMIC restrictions don't go as far as the sanctions the Trump administration has enacted against Chinese telecom equipment makers Huawei and ZTE. But the move represents a broadening of the U.S. campaign against China's tech sector that's likely to have wide impact.

  • In the short term, it will slow China's efforts to stand up a chip industry that can compete globally with rivals in the U.S., Taiwan and Japan. But in the long run, it could deepen China's resolve to achieve high-tech self-sufficiency.

What's next: U.S. firms will have to apply for licenses to sell stuff to SMIC, and the Commerce Department gets to decide whether to grant them. China watchers expect Beijing to retaliate.

Meanwhile, the federal judge who Sunday put a hold on a U.S. order to ban new downloads of TikTok in the U.S. explained his reasoning in a ruling released Monday.

  • The national security law that the Trump administration based its order on specifically exempts "informational materials" from being targeted, and TikTok's service — a video-sharing app embraced by young users — falls into that category, the judge said.

Our thought bubble: So far, the Trump administration is having more success dealing blows to Chinese tech via moves on hardware companies than by acting against software and services providers. That could be because U.S. law and culture places a high value on the free exchange of information and ideas — which, ironically, is far less protected in China today.

Go deeper

Dan Primack, author of Pro Rata
Jan 6, 2021 - Politics & Policy

Trump uses private companies to ratchet up economic pressure on China

Illustration: Aïda Amer/Axios

President Trump last night signed an executive order prohibiting transactions with eight Chinese apps, including Ant Group's Alipay, arguing they pose a national security threat.

Why it matters: This is the latest example of ratcheting up economic tensions with China, using private companies as pawns.

Trump bans transactions with eight Chinese software apps

Trump speaking at a rally in Dalton, Georgia, on Jan. 4. Photo: Alex Wong/Getty Images

President Trump signed an executive order Tuesday that prohibits transactions with eight Chinese software applications, claiming they pose a national security threat given their ability to access private information about their users.

Why it matters: The order comes two weeks before Trump leaves office, and it remains unclear whether President-elect Biden will continue enforcing Trump’s bans on Chinese companies.

Focus group: Former Trump voters say he should never hold office again

Illustration: Sarah Grillo/Axios

"Relief" is the top emotion some swing voters who used to support Donald Trump say they felt as they watched President Biden's swearing-in, followed by "hope."

Why it matters: For voters on the bubble between parties, this moment is less about excitement for Biden or liberal politics than exhaustion and disgust with Trump and a craving for national healing. Most said Trump should be prohibited from ever holding office again.