Microchips are key to understanding Trump's trade war with China

Microchips are key to understanding Trump's trade war with China

"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.

The US is cutting off exports to a Chinese semiconductor maker, citing "significant risk" to national security.

Monday's action comes after Micron Technology, a memory chip maker in Idaho, accused Fujian Jinhua of stealing its trade secrets in a federal lawsuit last December.

The Chinese chipmaker is the second major tech company after ZTE to have landed on the Trump administration export ban list -known as the Export Administration Regulations (EAR) Entity List.

On Monday, the Commerce Department accused the supplier, Fujian Jinhua Integrated Circuit Co., of sourcing its chip technology from the USA and positioning itself to push out American suppliers of United States military systems.

The order marks the second US action this year blocking technology exports to a Chinese buyer.

The action is similar to a Commerce Department move that almost put Chinese telecommunications equipment company ZTE out of business earlier this year by cutting it off from US suppliers.

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The first was ZTE after the company was caught exporting products to Iran and North Korea.

ZTE Corp., China's second-biggest maker of telecoms equipment, faced possible bankruptcy this year after Washington imposed a seven-year ban on sales of USA technology to the company over its exports to Iran and North Korea.

Under the move, American companies without a special license are restricted to sell components to Fujian Jinhua. The firm was accused of lying to American officials about punishing employees who violated USA sanctions against North Korea and Iran.

UMC countersued in a Chinese court, accusing Micron of infringing its patents, leading to a temporary ban in July on sales of Micron's main products in China.

Ross said the ban would limit the company's ability to "threaten the supply chain for essential components in our military systems".

He said suppliers such as Applied Materials Inc, Lam Research Corp and KLA-Tencor Corp were likely supplying equipment to Fujian Jinhua.

Observers say the latest restriction against Fujian Jinhua is likely to spark new tensions between the two economic powerhouses, . since the company is at the heart of the "Made in China 2025" program to develop new high-tech industries.

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