US-China trade war: US limits technology exports to Chinese firm citing security concerns

Beijing has invested heavily in Jinhua and other chip makers to transform China into a global leader in robotics, artificial intelligence and other technology industries.

Amid a mounting tariff battle  the US imposed restrictions on technology exports to a state-supported Chinese semiconductor maker on grounds of national security. An Associated Press report in Financial Express said, the controls imposed on Fujian Jinhua Integrated Circuit Co. indicate the American concern that Chinese competition could drive American technology suppliers out of business, and consequently, the military would be left without secure sources of components.
 
Beijing has invested heavily into Jinhua and other chip makers in its efforts to transform China into a global leader in robotics, artificial intelligence and other technology industries.
 
This has rattled the United States, Europe and other trading partners who say Beijing’s tactics violate its market-opening obligations. Moreover, US officials are worried that this might erode U.S. industrial leadership.
 
In a bis to pressure Beijing to roll back those plans, President Donald Trump has imposed tariffs of up to 25 per cent on $250 billion of Chinese goods.
 
Jinhua is completing “substantial production capacity” for integrated circuits, possibly using U.S. technology, which “threatens the long-term economic viability of U.S. suppliers of these essential components of US military systems,” the report quoted a Commerce Department statement.
 
The Chinese company was added to the department’s “Entity List,” that necessitates obtaining an export license for all software, technology and commodities, the Commerce Department said. Further, such applications “will be reviewed with a presumption of denial”, the department said.
 
Commerce Secretary Wilbur Ross said in the statement, that “will limit its ability to threaten the supply chain for essential components in our military systems”. 
 
This is the second US action this year blocking technology exports to a Chinese buyer.
 
Earlier, ZTE Corp., China’s second-biggest maker of telecoms equipment, was on the brink of 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.
 
The ban was lifted in July after ZTE paid a $1 billion fine, agreed to replace its executive team and hired compliance officers selected by the US.
 
Jinhua is currently embroiled in a court battle with a US chip maker, Micron Technology Inc., 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.
 
Source: FE

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