U.S. to Block Sales to Chinese Tech Company Over Security Concerns


The United States said on Monday that it would block a Chinese state-owned technology company from buying American components because it posed a national security threat, the latest volley in an escalating dispute between the world’s two largest economies.

The company, Fujian Jinhua Integrated Circuit, a manufacturer of semiconductors, “poses a significant risk” of becoming involved in activities that might infringe on national security, the Commerce Department said.

[Behind accusations that Fujian Jinhua was stealing American technology to power China’s future.]

The move could cripple Jinhua, which relies on American components for its semiconductors, and followed similar action taken by the Commerce Department this year to block sales of components to ZTE, a Chinese telecom company. The ZTE ban was rescinded after President Trump — responding to a request from President Xi Jinping of China in May — asked the department to lighten the penalty. ZTE agreed to pay a large fine, reshuffle its leadership and undergo compliance monitoring by the United States.

But relations between the United States and China have worsened since then, and the Trump administration is taking an increasingly hard line on transactions involving Chinese entities. It is eager to prevent China’s ascendance as an economic and technological powerhouse and has begun aggressively scrutinizing foreign deals to prevent Beijing from gaining access to valuable American intellectual property.

This month, the Treasury Department outlined how it would use new powers that allow the United States to review a wider range of foreign transactions, including those in sensitive industries like technology and telecommunications.

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

Jinhua has been on the Trump administration’s radar for several months. Micron Technology, a computer memory company in Idaho, accused Jinhua last year of stealing intellectual property. In July, Micron was barred from selling some of its products in China after Jinhua and its Taiwanese partner, United Microelectronics, accused Micron of violating their patents.

Jinhua is opening $5.7 billion factory in China’s Fujian Province and has become increasingly ambitious in its desire to become a global player in the memory chip business.

The United States and China have been engaged in a trade war, with Mr. Trump imposing tariffs on $250 billion worth of Chinese goods and threatening to hit all imports from China with levies. China has responded with its own tariffs, and the two countries have exchanged increasingly heated words in recent weeks.

How Trump’s Trade War Went From 18 Products to 10,000

The battle began when the United States imposed tariffs on solar panels and washing machines. It has led to a global tit-for-tat targeting billions of dollars of goods.

The United States wants China to open its market to American businesses and end its longstanding practice of pressuring American companies to hand over valuable technology as a condition of doing business there. Mr. Trump and Mr. Xi are expected to meet in Argentina next month at the Group of 20 summit meeting, where they plan to discuss trade, North Korea and other issues.

While Mr. Trump’s tariffs have proved to be unpopular with both Republican and Democratic lawmakers, his efforts to stop the theft of intellectual property have drawn praise even from his skeptics on trade.

“China’s state-owned & directed companies lie, cheat & steal at government’s behest,” Senator Marco Rubio, a Republican from Florida, said on Twitter on Monday. “Fujian Jinhua must be held accountable for being part of that illegality. This was the right move today to protect our tech knowledge.”

By Alan Rappeport


Please enter your comment!
Please enter your name here