By adding the company to the Export Administration Regulations "entity list", the U.S. commerce department makes "all exports, re-exports, software, and technology" to Jinhua subject to a licence, and applications for that licence "will be reviewed with a presumption of denial".
The controls imposed Monday on Fujian Jinhua Integrated Circuit Co. reflect concern Chinese competition could drive American technology suppliers out of business, leaving the military without secure sources of components.
The use of the "entity list" - which governs what companies US firms can do business with - to protect the economic viability of a USA industry appears to be unprecedented, said Washington trade lawyer Douglas Jacobson.More news: United Kingdom announces digital services tax on tech giants
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DoC officials are now barring United States companies from selling any products to Fujian Jinhua, which was recently nearing completion of a new dynamic random access memory (DRAM) factory project.
The restriction is similar to the Commerce Department's move that almost put Chinese telecommunication equipment company ZTE Corp out of business earlier this year, . after it was cut off from US suppliers. The move is likely futile as "such license applications will be reviewed with a presumption of denial", Commerce says. In turn, the companies countersued Micron in China, where courts sided with them and banned some of Micron's chips in China. Earlier in the year, the largest USA supplier of DRAM chips, Micron Technology Inc.
Recently, the United States hindered China's ZTE from working with USA organizations after it discovered it had disregarded U.S. sanctions against Iran and North Korea. The Trump administration revoked the ban after ZTE agreed to pay a $1 billion fine.
Ross said the ban would limit the company's ability to "threaten the supply chain for essential components in our military systems". Fujian Jinhua and its Taiwanese partner collaborated to lure Micron employees to steal company secrets, Micron claimed.