U.S. Bans Exports to Chinese Supercomputer Makers

The Trump administration banned sales of U.S. technology to five major Chinese developers of next-generation computers, saying they posed risks to American national security or foreign policy interests.

The blacklisted entities are central to China’s attempt to build a next-generation supercomputer capable of handling one quintillion calculations a second. The U.S. and China are competing for dominance in supercomputer manufacturing. The so-called “exascale” computers can be used for a variety of military and civil uses, including missile defense systems, encryption, weather prediction, and even cancer research.

The newly sanctioned entities are the Wuxi Jiangnan Institute of Computing Technology, Sugon of Beijing and three of its affiliates–Higon, Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology. The Commerce Department rule bans them from buying American technology and components without a specific waiver from the U.S. government.

“Sugon has publicly acknowledged a variety of military end uses and end users of its high-performance computers,” the Commerce Department rule said.

Wuxi Jiangnan is owned by the 56th Research Institute of the General Staff of China’s People’s Liberation Army and has a mission to support China’s military modernization, the Commerce Department said.

The Commerce Department said companies’s activities “pose a significant risk of being or becoming involved in activities contrary to the national security and foreign policy interests of the United States.”

The ban highlights the close connections between China’s technology companies and its military. Commerce Department added Chinese telecommunications giant Huawei Technologies Co. to the so-called “entities list” last month.
Sugon is central to Beijing’s plan to dominate the manufacturing of high-performance computers and servers. But its supercomputers rely on U.S. microchips and other technology. It’s not clear that the company can continue to make supercomputers without U.S. components.

The unexpected announcement on Friday night indicates that President Donald Trump is not flinching from ratcheting up trade tensions even as he prepares to meet with Chinese President Xi Jinping in Japan next week. It sends a signal that the Trump administration does not intend to compromise on its demands on China or accept China’s attempts to renege on agreements it made in earlier negotiations.