Opening a new front in its trade and technology disputes with China, the Trump administration on Monday took action to cut off a Chinese state-backed semiconductor maker from USA exports of components, software and technology goods.
Ross said the ban will limit the company's ability to "threaten the supply chain for essential components in our military systems".
However, Fujian Jinhua is now locked in a legal dispute with main rival, United States chip maker Micron Technology over IP theft. Subscribe to MarketWatch's free Bulletin emails.
Any further broadening of tariffs would show the Trump administration's determination to escalate its trade war with China even as companies complain about the rising costs of tariffs and financial markets continue to be nervous about the global economic fallout. It is eager to prevent China's ascendance as an economic and technological powerhouse and has begun aggressively scrutinizing foreign deals to prevent Beijing from gaining access to valuable American intellectual property.
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. American authorities lifted the ban in July after ZTE paid a $1 billion fine, agreed to replace its executive team and hired USA -selected compliance officers.
The US move will likely add to growing friction between the world's 2 largest economies.
"When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security", Commerce Secretary Wilbur Ross said in a statement.
But the restriction of exports to Fujian Jinhua actually relates to a much older problem: Accusations of Chinese businesses stealing American trade secrets to shift the balance sheets (and balance of power) in their favor. Trump and Xi are expected to meet in Argentina next month at the Group of 20 summit, where they plan to discuss trade, North Korea and other issues.
"China's state-owned & directed companies lie, cheat & steal at government's behest", Sen. "Fujian Jinhua must be held accountable for being part of that illegality".