Yet SMIC, intent on joining the world's top chipmakers, isn't about to give up. Joseph Xie, senior director for business development, says his engineers can find ways to make more sophisticated chips, despite the ban. "It will be more difficult," says Xie. "But it is possible."
While Xie has no interest in weapons, the Pentagon's fears are understandable. The boundaries between civilian and military technology have melted into semantic distinctions. So China's generals, like its chipmakers, can waltz around tech trade restraints. China is no enemy to the U.S. But it is the last big communist power--home to the PLA, which the Pentagon considers a long-term threat.
In July, an advisory panel called the U.S.-China Security Review Commission issued a report warning Congress that Beijing is acquiring "dual use" technology: civilian knowhow with defense applications. Despite a U.S. ban on the sale of supercomputers to the Chinese military, the report alleged, Beijing has purchased advanced machines from Western and Asian sellers. Ostensibly, the hardware was bought for commercial purposes. But it was used to simulate warhead detonations and long-range missile launches.
China now has the knowhow to develop such devices as parasite satellites, which can attach themselves to other orbiting satellites and destroy them. There's no indication China will create such weapons, says Joan Johnson-Freese, chair of the department of national security decision-making at the Naval War College in Newport, R.I. But as she puts it, "all technology is intrinsically dual-use," and when it comes to space, China "is way up on the learning curve."
In Taiwan, cyberwar is also a worry. At the Chinese Council of Advanced Policy Studies, a Taipei think tank, Andrew Yang claims Chinese government-backed hackers have cultivated the skills to disrupt large-scale computer networks with viruses and other programs.
Beijing insists that the country isn't interested in military adventures. Many U.S. business leaders agree and are lobbying Washington to lower restrictions on tech exports. And even Beijing's toughest critics admit that the tech gap between the U.S. and China is vast. But as China's civilian technology base grows, American techies doing business in China had better get used to the Pentagon peering over their shoulders. Einhorn covers Asian technology from Hong Kong.