USA to Block Sales to Chinese Tech Company Over Security Concerns

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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, reports CNN.

The commerce department argued that it had engaged in "activities that are contrary to the national security interests of the United States". Last year, Micron filed suit against UMC, alleging that UMC stole memory technology from the company and transferred it to Jinhua Integrated Circuit Co.

Trade experts said the Trump administration's move may be an unprecedented effort to use a legal tool known for punishing foreign companies that send USA -origin goods to sanctioned countries such as Iran to instead protect the economic viability of a US firm.

In a similar move earlier this year, the department blocked sales of component to different Chinese companies including ZTE Corporation. Commerce Secretary Wilbur Ross noted that the State would ban US firms from exporting software and technology goods to the Chinese chipmaker.

ZTE, which failed to comply with stipulations after violating the sanctions placed on Iran and North Korea, was allowed to resume purchases of USA products after a revised settlement and payment of a $1 billion fine. "The additional production, in light of the likely USA -origin technology, threatens the long-term economic viability of US suppliers of these essential components of US military systems".

The US Commerce Department said it would confine the fare of programming and innovation merchandise from American firms to Chinese chipmaker Fujian Jinhua. Jinhua sued the US company the following month in a Chinese court and obtained an order blocking sales of some Micron products. So far, Washington has imposed tariffs on $200 billion of Chinese goods and Beijing retaliated with tariffs on $60 billion of United States goods and stopped buying American oil. "Placing [Fujian] Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems".

Linley Gwennap, a chip expert and president of the Linley Group, said Fujian Jinhua was a relatively new company building DRAM as part of China's larger plan to become self-sufficient at making such chips.

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