US Bans Sales to Chinese Chipmaker Jinhua as Trade Tensions Deepen
Li Na
/SOURCE : Yicai
US Bans Sales to Chinese Chipmaker Jinhua as Trade Tensions Deepen

(Yicai Global) Oct. 31 -- The US has blocked Chinese state-backed Fujian Jinhua Integrated Circuit's access to US-made parts amid allegations of intellectual property theft.

Jinhua will need a special license to buy components from US companies, the US Department of Commerce said in a statement on Oct. 29. The move may imperil the chipmaker's USD5.7 billion factory it has started building in its southeastern home province. The ban also signals that trade tensions between the two countries are hardly over anytime soon. 

Jinhua "poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States," the ministry said. 

Yicai Global contacted Jinhua but received no immediate reply.

In 2016, Jinhua was included China's 13th Five Year Plan to accelerate the country's journey toward high-tech innovation in the name of 'Made in China 2025' strategic plan. Founded in 2016 and backed by the local government, the firm has reached a production capacity of 60,000 chips per month. 

The incident channels echoes from a previous patent lawsuit that US Micron Technology filed against Jinhua and United Microelectronics Corp., an insider in the industry told Yicai Global. Micron accused the two Chinese firms of stealing trade secrets.

Micron is concerned about the potential threat posed by the rise of China's new tech firms, including Jinhua, analysts said. For now, some 90 percent of the dynamic random access memory chips are made by South Korean and US companies.

"Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems," Commerce Secretary Wilbur Ross said in the statement. 

Jinhua teamed up with Taiwan's UWC in May 2016 to fund joined research to develop integrated circuits. The results were supposed to be shared, according to their agreement.

Editor: Emmi Laine 

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Keywords: Fujian Jinhua Integrated Circuit Company , Restrict Exports Entity List , Department of Commerce , USA , Micron Technology