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US Limits Tech Exports to Chinese Firm on Security Grounds

US Limits Tech Exports to Chinese Firm on Security Grounds

By Associated Press | Updated: 1 November 2018 11:20 IST

Highlights

Controls were imposed Monday on Fujian Jinhua Integrated Circuit Co.
US is concerned competition could drive US tech suppliers out of business
Beijing has spent heavily to build up Jinhua and other chip makers

The Trump administration has imposed restrictions on technology exports to a state-supported Chinese semiconductor maker, citing national security grounds amid a mounting tariff battle.

The controls imposed Monday on Fujian Jinhua Integrated Circuit Co. reflect concern Chinese competition could drive American technology suppliers out of business, leaving the military without secure sources of components.

Beijing has spent heavily to build up Jinhua and other chip makers as part of efforts to transform China into a global leader in robotics, artificial intelligence and other technology industries.

The United States, Europe and other trading partners say Beijing's tactics violate its market-opening obligations. American officials worry they might erode US industrial leadership.

President Donald Trump has imposed tariffs of up to 25 percent on $250 billion of Chinese goods in an effort to pressure Beijing to roll back those plans.

Jinhua is completing "substantial production capacity" for integrated circuits, possibly using US technology, which "threatens the long-term economic viability of US suppliers of these essential components of US military systems," said a Commerce Department statement.

The company was added to the department's "Entity List," which will require it to obtain an export license for all software, technology and commodities, the Commerce Department said. It said such applications "will be reviewed with a presumption of denial."

That "will limit its ability to threaten the supply chain for essential components in our military systems," Commerce Secretary Wilbur Ross said in the statement.

China's foreign ministry said it hoped foreign governments would treat Chinese companies "reasonably and fairly."

"We hope the United States will do something that serves the two sides' interest and helps improve mutual trust, instead of the other way around," said a ministry spokesman, Lu Kang.

Calls to Fujian Jinhua's offices rang unanswered Tuesday and there was no immediate response to an inquiry made through their website.

The order marks the second US action this year blocking technology exports to a Chinese buyer.

ZTE Corp., China's second-biggest maker of telecoms equipment, faced possible bankruptcy this year after Washington imposed a seven-year ban on sales of US technology to the company over its exports to Iran and North Korea.

American authorities lifted the ban in July after ZTE paid a $1 billion (roughly Rs. 7,400 crores) fine, agreed to replace its executive team and hired US-selected compliance officers.

Meanwhile, Jinhua is embroiled in a court battle with US chip maker Micron Technology, which accuses the Chinese company of stealing its technology.

Micron sued Jinhua in December in federal court in California. Jinhua sued the US company the following month in a Chinese court and obtained an order blocking sales of some Micron products.

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