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US restricts Chinese chipmaker from buying American parts

The United States is restricting exports to a state-backed Chinese company that makes semiconductors, the la...

Posted: Oct 30, 2018 2:55 AM
Updated: Oct 30, 2018 2:56 AM

The United States is restricting exports to a state-backed Chinese company that makes semiconductors, the latest escalation in Washington's trade fight with Beijing.

On Monday, the US Commerce Department said Fujian Jinhua Integrated Circuit Company would not be able to buy components from American companies without a special license.

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The export ban was put in place because Fujian Jinhua "poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States," the agency said.

"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 (ZTCOF) 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.

Fujian Jinhua, based in East China's Fujian province, was founded in 2016 and has financial backing from the provincial government, according to Chinese state media. It's building a $5.7 billion chip factory in the region.

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