US limits tech exports to Chinese firm on security grounds

In this May 18, 2018 photo, a visitor walks past a display showing microchips and circuit boards at the 21st China Beijing International High-tech Expo in Beijing.  AP

WASHINGTON — The Trump administration has imposed restrictions on technology exports to a state-supported Chinese semiconductor maker, citing national security grounds amid a mounting tariff battle.

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.

Beijing has spent heavily to build up Jinhua and other chip makers as part of efforts to transform China into a global leader in robotics, artificial intelligence and other technology industries.

The United States, Europe and other trading partners say Beijing’s tactics violate its market-opening obligations. American officials worry they might erode US industrial leadership.

President Donald Trump has imposed tariffs of up to 25 percent on $250 billion of Chinese goods in an effort to pressure Beijing to roll back those plans.

Jinhua is completing “substantial production capacity” for integrated circuits, possibly using U.S. technology, which “threatens the long-term economic viability of US suppliers of these essential components of U.S. military systems,” said a Commerce Department statement.

The company was added to the department’s “Entity List,” which will require it to obtain an export license for all software, technology and commodities, the Commerce Department said. It said such applications “will be reviewed with a presumption of denial.”

That “will limit its ability to threaten the supply chain for essential components in our military systems,” Commerce Secretary Wilbur Ross said in the statement.

The order marks the second US action this year blocking technology exports to a Chinese buyer.

ZTE Corp., China’s second-biggest maker of telecoms equipment, faced possible bankruptcy this year after Washington imposed a seven-year ban on sales of U.S. technology to the company over its exports to Iran and North Korea.

American authorities lifted the ban in July after ZTE paid a $1 billion fine, agreed to replace its executive team and hired U.S.-selected compliance officers.

Meanwhile, Jinhua is 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. /ee