Published: Fri, November 02, 2018
Markets | By Erika Turner

Chinese chip maker Fujian Jinhua added to USA export ban

Chinese chip maker Fujian Jinhua added to USA export ban

President Donald Trump's administration took action on Monday to cut off a Chinese state-backed chipmaker from USA suppliers amid allegations the firm stole intellectual property from US semiconductor company Micron Technology Inc.

The US Commerce Department has announced restrictions on exports to state-backed Chinese company Fujian Jinhua which makes semiconductors.

Micron, a maker of memory chips with factories in Virginia and Utah, has accused Fujian Jinhua and Taiwanese partner United Microelectronics Corp of stealing its chip designs in a lawsuit in California.

Have breaking news sent to your inbox. So far, Washington has imposed tariffs on $200 billion of Chinese goods and Beijing retaliated with tariffs on $60 billion of USA goods and stopped buying American oil.

China established Jinhua in February 2016 in a bid to make its own home-produced chips, with the firm investing 37 billion yuan ($5.6 billion) that year to build a production line.

"When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security", Secretary of Commerce Wilbur Ross said in a statement.

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Bargaining chips: Integrated circuits have become a central theme of the trade war, partly because China is so dependent on importing them from the US.

The Chinese regime is putting enormous pressure on Chinese companies to increase domestic production of core technologies, with the goal of achieving self-sufficiency and dominating global supply chains by 2025.

Micron said it will follow the ruling while requesting the Fuzhou Court to reconsider or stay its decision. Jinhua sued the USA company the following month in a Chinese court and obtained an order blocking sales of some Micron products.

Jinhua, backed by the government of its home province of Fujian, is one of several companies China is trying to mold into a world-class semiconductor industry player.

The action is similar to a Commerce Department move that almost put Chinese telecommunications equipment company ZTE Corp out of business earlier this year by cutting it off from US suppliers. The move is likely futile as "such license applications will be reviewed with a presumption of denial", Commerce says.

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