Fujian Jinhau, which also goes by JHICC, was placed on the Bureau of Industry and Security’s Entity List, which requires a Commerce Department license for all exports, re-exports and transfers of commodities, software and technology subject to the Export Administration Regulations (EAR) to Jinhua. These licenses, based on the company’s placement on the Entity List, likely will be denied.
Fujian Jinhua is nearing completion of new $5.7 billion factory that will manufacture dynamic random access memory (DRAM) integrated circuits. The company relies on U.S. semiconductor imports to make its integrated circuit, which Commerce said “threatens the long-term economic viability of U.S. suppliers of these essential components of U.S. military systems.”
Commerce Secretary Wilbur Ross said in a statement, “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.”
Last year, the Chinese company was accused by U.S.-based Micron Technology of stealing intellectual property for the manufacture of its circuits. Fujian Jinhau responded with similar accusations against Micron earlier this year.
Commerce and the Chinese government made an agreement in June to lift the denial order once an escrow payment of $400 million was made and ZTE replaced its board of directors and senior leadership. ZTE also was required under the agreement to retain a team of special compliance coordinators selected by and answerable to BIS for the next 10 years.
Lifting the denial order was a relief to the U.S. semiconductor industry, which is estimated to provide up to 60 percent of the components that go into making ZTE’s telecommunications products.
Another Chinese telecommunication giant the U.S. government has been closely monitoring for possible national security violations is Shenzhen-based Huawei Technologies Co. Ltd. The company already has been accused by five countries, including the U.S., of allowing the Chinese government to use its technology for spying.