October 30, 2018
The U.S. Commerce Department announced yesterday that it plans to restrict American companies from doing business with semiconductor startup Fujian Jinhua Integrated Circuit Co. Micron Technology has accused the state-owned Chinese chipmaker of stealing company secrets, which has raised concerns regarding national and economic security. The restriction will prevent U.S. firms from selling software and goods to Jinhua, which relies on U.S. technology to build its chips. The announcement is the latest in an ongoing battle with China over intellectual property issues.
“The Commerce Department’s action against Jinhua was reminiscent of an April decision — which President Trump later reversed at the behest of Chinese President Xi Jinping — to restrict American companies from selling components to telecoms giant ZTE Corp. for violating terms of an earlier deal to settle allegations that it engaged in sanctions-busting sales to Iran and North Korea,” reports The Wall Street Journal.
“Yet experts said the Commerce Department move against Jinhua sets a new precedent by punishing a foreign firm for allegedly stealing U.S. intellectual property.”
In addition to impacting Jinhua’s ability to manufacture chips, the announcement could have a long-term affect on U.S. companies and their ability to compete in a global chip industry.
In December, Micron Technology filed a lawsuit against Jinhua in a California federal court, after which Jinhua followed up with its own suit against Micron in China’s Fujian province, “and won a temporary order blocking some Micron units from selling products in China on which each company claims patents.”
In statement this summer, Micron claimed “the central government of China has often stated that the rights of foreign companies are fairly and equally protected in China,” but the court’s ruling was “inconsistent with this proclaimed policy.”