An American ban defangs a nascent Chinese chip champion

JINJIANG, A COASTAL city in Fujian province, is known for its thriving $15bn shoe industry. Since the announcement in 2015 of a national plan to dominate ten promising industries, known as “Made in China 2025”, the city has marched into semiconductors. By 2025 it aims to build a local chip industry that will be as valuable as its footwear one. Among its new stars is Fujian Jinhua Integrated Circuit, a maker of dynamic random access memory (DRAM) chips, the commodity semiconductors snapped into smartphones, laptops and servers.

The chipmaker, set up in 2016, is finishing off a $5.7bn factory in Jinjiang. It may need to delay the ribbon-cutting. On October 29th America’s Department of Commerce put a swingeing export restriction on Jinhua by barring American firms from selling it components. It said the state-owned firm posed a “significant risk” to American national security, and could “threaten the long-term economic viability” of its supply chain for military parts. America fears Chinese state ambitions to compete globally in new technologies, often through unfair or illegal means. But the economic rationale for its ban seems worryingly broad and could be applied to many other firms. China hit back that America was misusing export controls.

The grievances against Jinhua are clear. On top of local-government investment,...

via Business Feeds

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