Thc costs of the trade war with the U.S. are increasingly taking their toll on China.
Fujian Jinhua, a massive chip start-up owned by the Chinese government, will have to stop production by March due to U.S. sanctions, the Financial Times reported Monday.
The U.S. Commerce Department in October effectively banned Fujian Jinhua from buying components, software and technology goods from U.S. firms. The Trump administration said the moved was necessary to prevent company from flooding the market with cheap chips that are also made by U.S. companies that supply the U.S. military.
Late last year, the Justice Department filed criminal charges against Fujian Jinhua for allegedly conspiring steal technology from Micron, a U.S. chipmaker. Micron had filed a civil lawsuit in California accusing Fujian and its Taiwanese partner United Microelectronics Corp of stealing its chip designs. Fujian pled not guilty to the criminal charges in January.
When Fujian sued Micron in China, a Chinese court banned Micron chips from being sold in China.
Fujian Jinhua is now rapidly running out of imported materials vital for keeping its factory running as a result of the export ban, according to the Financial Times report, which cites two people close to Jinhua and United Microelectronics.
The crippling of Fujian Jinhua has echoes of the earlier near-death experience of ZTE Corp, which was also brought nearly to a halt because of a U.S. export ban. Like ZTE, Fujian is a key company in the “Made in China 2025” program to develop and dominate high-tech industries.
ZTE was rescued when the Trump administration agreed to throw it a lifeline and back off export restrictions in exchange for changes to the company’s management and board, as well as access by U.S. agents to monitor the company.