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Trade war

US threatens Chinese chipmaker with ban on buying American tech

Fujian Jin Hua accused of receiving intellectual property stolen from Micron

Fujian Jin Hua's new memory chip capacity has raised concerns.   © Reuters

WASHINGTON -- The U.S. on Monday took its trade and technology war with China to another level. It unveiled plans to block exports to a state-backed chipmaker being sued by Micron Technology of the U.S. for allegedly stealing designs.

The U.S. Commerce Department said it is planning to add Fujian Jin Hua Integrated Circuit to a list of entities that cannot purchase components, software or technology from U.S. companies. In making the announcement, the department cited significant risks the Chinese company could pose to U.S. security.

Fujian Jin Hua, also known as JHICC, is central to Beijing's ambitions to develop the capability to produce homegrown semiconductors under the China Manufacturing 2025 initiative.

The administration of U.S. President Donald Trump is using trade obstacles to pressure China in regard to what Washington calls "intellectual property theft." The U.S. has already added tariffs on certain Chinese imports in an attempt to twist China's arm on the matter.

Now it is turning to restrictions on U.S. exports to keep China from obtaining additional American technologies.

By being put on the list, prior permission would be required before U.S. companies could export chipmaking equipment and other American products to JHICC. The measure would effectively eliminate direct sales of American tech to the chipmaker.

The Commerce Department said it is moving toward putting JHICC on the list because the chipmaker has been using technologies suspected to have been imported from the U.S. to produce DRAM. The department said this could threaten U.S. chip suppliers' ability to sell products to the U.S. military for use in high-tech systems.

Micron in 2017 filed a lawsuit in California that accuses Taiwan's United Microelectronics of stealing corporate secrets and handing them to JHICC.

A month later, UMC sued Micron for alleged patent infringement, taking its case to a Chinese court. The court in July issued an injunction against sales of Micron products in China.

The U.S. department took similar action in April against ZTE, making it impossible for the Chinese telecommunications equipment maker to source products from U.S. suppliers and forcing it to halt production. The Trump administration later relented.

If the Commerce Department goes ahead with the threat to put JHICC on the list, it could significantly impact JHICC's operations.

On another front in the trade war, the U.S. is preparing to announce by early December tariffs on all remaining Chinese imports if talks in November between presidents Donald Trump and Xi Jinping fail to produce results, Bloomberg reported.

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