United States restricts Chinese chipmaker from buying American parts

Jermaine Castillo
November 2, 2018

The Trump administration has launched a new salvo in its escalating trade war with China by adding Fujian Jinhua Integrated Circuit, a state-backed company, to a list of businesses that may not buy components from USA firms.

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.

The United States, Europe and other trading partners say Beijing's tactics violate its market-opening obligations. In April, the Trump administration banned the Chinese telecommunications company ZTE from importing USA microchips over the illegal export of technology to Iran and North Korea. Earlier this year the U.S.

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The US department of commerce has issued an edict that effectively bans American companies exporting technology to Chinese DRAM maker Fujian Jinhua Integrated Circuit Company. The company will face additional license requirements to obtain US technology.

The administration is concerned the Chinese firm could flood the market with cheap chips that are also made by USA companies that supply the US military. Such license applications will be reviewed but with a presumption of denial, the agency said.

U.S. Commerce Secretary Wilbur Ross said the U.S. believes the Chinese firm's new plant was likely the beneficiary of "U.S. -origin technology" and its additional production would threaten the long-term viability of U.S. chipmakers.

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"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.

The Commerce Department said that ZTE lied to American officials about punishing employees who violated U.S. sanctions against North Korea and Iran.

Calls to Fujian Jinhua's offices rang unanswered Tuesday and there was no immediate response to an inquiry made through their website. That figure quickly grew to $200 billion as the list of affected products was updated, and many have feared that the tariffs could lead to higher prices for tech products or even hinder the USA semiconductor industry (although we don't know for sure how tech products will be affected). The ban was lifted in July after ZTE paid a $1 billion fine and agreed to oversight measures.

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Monday's action comes after Micron Technology, a memory chip maker in Idaho, accused Fujian Jinhua of stealing its trade secrets in a federal lawsuit last December. Micron went to the federal district court of northern California to accuse UMC of hooking up with Jinhua to build a DRAM lab, and headhunting Micron staff (who brought intellectual property with them, Micron alleged) to run it.

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