Tuesday, 20 November, 2018

US restricts exports to China's Fujian Jinhua

US bans exports to Chinese DRAM maker citing national security risk Trump hits Chinese chipmaker with export ban, still expects ‘great deal’ with Beijing
Nellie Chapman | 02 November, 2018, 07:55

"When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security", said US Commerce Secretary Wilbur Ross in a statement.

Setting up a new front in its trade and tech disputes with China, . the U.S. Commerce Department is blocking a Chinese state-backed semiconductor maker from importing U.S. products to make its chips.

U.S. hardware maker Micron Technology has repeatedly accused Fujian Jinhua, and its Taiwanese partner United Microelectronics Corp (UMC), of stealing its chips designs [1, 2].

The choice comes in the midst of claims that the state-sponsored organization has stolen protected innovation from USA chipmaker Micron Technology, as indicated by reports.

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

"This appears to be a dramatic expansion of the use of the entity list for economic purposes", he said, explaining that the entity list had traditionally been used to prevent imminent violations of U.S. export control laws.

The three companies are now duking it out in United States and Chinese courts.

Semiconductors are among China's biggest imports, rivaling oil, and have become a stark reminder of its dependence on U.S. technology.

ZTE, which had violated a deal to settle violations of sanctions on Iran and North Korea, was allowed to resume purchases of USA products after a revised settlement and payment of a $1 billion fine. "The additional production, in light of the likely US -origin technology, threatens the long-term economic viability of USA suppliers of these essential components of US military systems". Micron has repeatedly accused Fujian Jinhua of stealing its trade secrets.

UMC countered with patent infringement lawsuits against Micron in the mainland China courts in January of 2018 and things went badly for the US.

Jinhua, backed by the government of its home province of Fujian, is one of several companies China is trying to mold into a world-class semiconductor industry player.

It was not immediately clear what effect the Commerce Department action will have on Fujian Jinhua's operations. "Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems".

The Fujian-based DRAM maker is nearing completion of a vast $5.7bn wafer-manufacturing plant, which will help drive the Made in China 2025 strategy of self-reliance.