US Restrict Exports to Chinese Chip Maker Over Technology Theft | News & Opinion

The Commerce Department is restricting US exports to a Chinese DRAM producer over claims the company stole the manufacturing technology from the US.

On Monday, the Commerce Department accused the supplier, Fujian Jinhua Integrated Circuit Co., of sourcing its chip technology from the US and positioning itself to push out American suppliers of US military systems.

“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.

The move comes after US-based Micron Technology accused the Chinese company of conspiring to obtain its trade secrets.

In a 2017 lawsuit, Micron said Jinhua partnered with Taiwan’s United Microelectronics Corporation to steal US trade secrets as a way to advance the Chinese company’s DRAM chip production. The two parties pulled off the corporate espionage by poaching employees from Micron’s Taiwan affiliate, who then allegedly handed over Micron trade secrets to Jinhua.

Jinhua was only founded in 2016, but it’s been expanding fast. The company has invested $5.65 billion to build a factory in China devoted to producing memory chips. According to Micron’s lawsuit, Jinhua’s goal is to begin mass production of DRAM chips this year.

However, the Commerce Department’s export ban could end up limiting the Chinese company’s development. The company has now been put on what is known as an Entity List, which will require Jinhua to apply for a license in order to receive US exports of commodities, software, and technology. The move is likely futile as “such license applications will be reviewed with a presumption of denial,” Commerce says.

The export ban, meanwhile, comes as the US is engaged in a trade war with China. The Trump administration has accused the country of using unfair trade practices to compel US companies to hand over intellectual property to their Chinese counterparts. The Pentagon has also warned that the US supply chain is becoming too dependant on Chinese manufacturing.

Jinhua Integrated Circuit did not immediately respond to a request for comment. But in China, the company sued Micron Technology itself, with claims that the US company has violated its patents. In July, a Chinese court sided with Jinhua and temporarily barred Micron from selling certain chip products in the country.