U.S. to Restrict Chip Business with China

The U.S. has raised the stakes in a battle with Beijing over intellectual property by restricting American firms from doing business with a state-owned Chinese chip maker that Micron Technology Inc. has accused of stealing its secrets.

Citing national and economic security concerns, the Commerce Department said Monday that it will begin restricting American companies from selling software and technology goods to Fujian Jinhua Integrated Circuit Co., a semiconductor startup into which the Chinese government has been pouring money as part of an effort to build its own chip industry. The decision has the potential to cause significant damage to the new chip maker, which still relies on U.S. technology to produce its own chips.

“Jinhua poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States,” the Commerce Department said in a statement announcing the new restrictions. Jinhua didn’t immediately provide comment.

“When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security,” Commerce Secretary Wilbur Ross said in a statement. Ross said the ban will limit the company’s ability to “threaten the supply chain for essential components in our military systems.”

The move comes as the United States and China are locked in a standoff over trade, market access and the transfer of technology secrets. It could add strain to an already tense bilateral relationship. Negotiations have reportedly stalled ahead of a planned meeting between US President Donald Trump and Chinese President Xi Jinping on the sidelines of the upcoming G20 summit in Argentina.

Earlier this year, the Trump administration put an export ban on ZTE, one of China’s biggest tech companies. The agency said that ZTE lied to American officials about punishing employees who violated US sanctions against North Korea and Iran. The ban, which became a flashpoint between the two nations, was lifted in July after ZTE paid a $1 billion fine and agreed to oversight measures.

The Commerce Department 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. Fujian Jinhua filed a countersuit against Micron in Chinese court in January.

 

Todd “Bubba” Horwitz