US-China chip war: Washington imposes trade ban on 21 Chinese chipmakers

The United States on Thursday banned 36 Chinese companies from importing components from the United States as part of the country’s new export rules. The banned Chinese companies also include Yangtze Memory Technologies and Shanghai Micro Electronics Equipment, two of China’s biggest chipmakers. There are 19 other “major” Chinese players in the artificial intelligence chip sector on the US trade blacklist, in a significant crackdown on China’s chip industry.

The US added these 36 China-headquartered companies to the Entity List of its Department of Commerce, following the exact suit it had taken up while banning telecom giant Huawei in May 2019. 

The US Department of Commerce statement said that 21 of the 36 newly listed firms were working on artificial intelligence technology projects for China’s military. While seven “have demonstrable direct ties” to the development of hypersonic airplanes, hypersonic weapons and ballistic missiles, as well as the software models’ damage caused by weapons.

What does being in the US Entity List mean?

For the firms added to the US Department of Commerce’s Entity List, it means that U.S. companies can no longer sell goods to them without obtaining a permit. These permits are then difficult to obtain and make the business infeasible. 

Why did the US ban Chinese firms?

This is one among a series of moves that the US policymakers have been taking amid ‘growing national security concerns’.

Alan Estevez, the under secretary of commerce for industry and security who led the charge on the new export rules, said in a statement that the new rules are in furtherance from the rules issued on Oct. 7 that only banned the sale of high-tech chip technology to Chinese companies. 

“Today we are building on the actions we took in October to protect U.S. national security by severely restricting (China’s) ability to leverage artificial intelligence, advanced computing, and other powerful, commercially available technologies for military modernization and human rights abuses,” Estevez said.

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