US Bans Exports To Chinese Chip Firm Fujian Jinhua

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Trade wars or national security? US government places Chinese chip firm on export ban list amid allegations of IP theft

The trade war between the United States and China expanded this week with the news that a Chinese chip firm has been placed on export ban list.

The firm in question, Fujian Jinhua Integrated Circuit Co Ltd, is a manufacturer of DRAM memory chips, and the move means that it now cannot purchase components, software and technology goods from American firms.

The US administration applied a similar ban on Chinese firm ZTE, one of the world’s largest telecommunications equipment makers. That move that almost put the firm out of business, until President Donald Trump personally intervened in an effort to protect Chinese jobs.

Chinese ban

The US Commerce Department on Monday announced that it was restricting American companies from selling crucial software and technology to Fujian Jinhua, saying it “poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States.”

“Jinhua is nearing completion of substantial production capacity for dynamic random access memory (DRAM) integrated circuits,” said the US department. “The additional production, in light of the likely US-origin technology, threatens the long term economic viability of US suppliers of these essential components of US military systems.”

Specifically, the US is concerned that the Chinese products will threaten the survival of US firm Micron Technology, which is also a memory chip maker and supplier to the US military.

Furthermore, Micron has alleged in California lawsuits that Fujian Jinhua and Taiwanese partner United Microelectronics Corp alleged stole its chip designs. The two firms have in turn reportedly sued Micron in China, where courts sided with them and banned some of Micron’s chips in China, according to Reuters.

“When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security,” secretary of Commerce Wilbur Ross said. “Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems.”

The Entity List allows the US to target firms it reasonably believes to be involved, or to pose a significant risk of being or becoming involved, “in activities contrary to the national security or foreign policy interests of the United States.”

Fujian Jinhua will now have to apply for a special licence to export anything from the United States.

Fujian Jinhua is said to be owned by the provincial government of Fujian in south eastern China.

Western worries

The West has grown increasingly concerned about Chinese tech firms, and their impact on national security, over the past few years.

The UK’s national cyber-security agency for example recently warned telecoms companies not to use equipment or services from ZTE, saying to do so would harm British national security.

In 2012 the US House Intelligence Committee had warned that both Huawei and ZTE posed a national security threat and recommended they were banned from the US.

Such warnings have been regularly repeated, and the US recently blocked the proposed takeover of Qualcomm by Broadcom on the grounds that it could boost Huawei’s influence over 5G standards.

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Author: Tom Jowitt
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