US government sanctions Chinese chip maker Fujian Jinhua over claims of intellectual property theft

China urges Trump's government to "stop its wrong actions" following US embargo on Chinese firm accused of stealing Micron Technology IP

The US government has imposed sanctions against a Chinese semiconductor company at the centre of allegations that it stole intellectual property belonging to Micron Technology, the US memory chip maker.

Fujian Jinhua Integrated Circuit Co Ltd was added to a list of entities banned from buying components, software and other technology from US companies on Monday.

The US government is also concerned that the Chinese state-backed company could flood the market for particular types of chips made by US companies supplying the US military. If those companies are driven out of business or forced to withdraw from the market, the US military would be forced to find supplies of sensitive components from non-US companies.

Jinhua poses a significant risk of becoming involved in activities that are contrary to the national security interests of the US

"Jinhua poses a significant risk of becoming involved in activities that are contrary to the national security interests of the US," the order released yesterday claimed.

It continued: "Jinhua is nearing completion of substantial production capacity for dynamic random access memory (DRAM) integrated circuits. The additional production, in light of the likely US-origin technology, threatens the long term economic viability of US suppliers of these essential components of US military systems."

US Secretary of Commerce Wilbur Ross added: "When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security. Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems."

As a result of the order, US suppliers to Fujian Jinhua Integrated Circuit will need to apply for a licence from the Commerce Department.

Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems

The move comes as pressure increases on China to clampdown on what is regarded as widespread intellectual property theft, with Fujian Jinhua effectively accused of stealing $39 billion worth of Micron Technology's intellectual property.

Fujian Jinhua is not the only Chinese semiconductor company to be accused of appropriating intellectual property, with the tacit support of the Chinese state. In 2017, a former TSMC engineer was prosecuted in Taiwan over claims that he stole trade secrets after being headhunted by Shanghai Hueli Microelectronics (HLMC) in China.

Chinese wind turbine maker Sinovel Wind was also found guilty by a US court in January of stealing technology from American Semiconductor in a spate of thefts that began in 2011. Reuters notes that, in that time, the company's stock price fell from $400 to just $5.

However, China's Commerce Ministry responded to the sanctions against Fujian Jinhua by urging the US government to "stop its wrong actions".

The sanctions come just a week after it was claimed that China Telecom exploits its points-of-presence on foreign internet backbones for the purpose of conducting industrial espionage.

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