Tuesday, October 30th 2018

US Bans Exports to Chinese DRAM Maker Fujian Jinhua Citing National Security Interests

The United States government, via the Department of Commerce, has banned all exports from national companies to China-based Fujian Jinhua Integrated Circuits Ltd. The ban, citing "significant risk of becoming involved in activities that are contrary to the national security interests of the United States", demands that a license is required for "all exports, re-exports, and transfers of commodities, software and technology (...) to Jinhua." It then adds that these license applications will be reviewed - always - with a presumption of denial.
According to the announcement, Jinhua is nearing completion of substantial production capacity for DRAM memory (which it is; the company is finishing construction of a $5.7 billion factory in China's Fujian Province). The announcement then goes on to say that this additional production, which is supported by "likely U.S.-origin technology", referring to the patent war going on between Fujian and Idaho-based Micron, threatens the long term economic viability of U.S. suppliers of these essential components of U.S. military systems. And of course, any company looking to produce modern semiconductors essentially has to have access to products and tools that are only available via US companies - which means that either construction of the Fujian facility is finished, or the company will have a hard time bringing it to production status, thus burying the funds already invested.

According to Washington trade lawyer Douglas Jacobson, quoted by Reuters, the use of the "entity list" - where Fujian now finds itself and which bans exports pending review - to protect the economic viability of a U.S. industry appears to be unprecedented, adding that "This appears to be a dramatic expansion of the use of the entity list for economic purposes."

As an addendum, this likely won't favor - at all - DRAM pricing for the end-user. Additional production capacity would increase available supply, and that might not be in the cards anymore, at least from Fujian, following this move by the US government. Sources: Commerce.Gov, NY Times, Reuters
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19 Comments on US Bans Exports to Chinese DRAM Maker Fujian Jinhua Citing National Security Interests

#1
R0H1T
So depending on which side of the fence you are, Pacific Ocean being the proverbial fence, this could mean a lot of things for lot of different entities.
In the short term DRAM prices may not go down, in fact they may just shoot up especially if China isn't able to export their production.
Posted on Reply
#3
R0H1T
blobster21 said:
This is not something to be worried about. China's own national market is huge enough to swallow any production excess.

Projections : https://www.statista.com/statistics/796500/china-big-data-market-size/
That's not even remotely accurate, it could be if China bans domestic "consumption" from foreign chipmakers like Micron, Samsung or SKH.
Anyway who builds a near $6 billion plant just for domestic consumption, especially from China :rolleyes:
Posted on Reply
#4
DeathtoGnomes
demands that a license is required for "all exports, re-exports, and transfers of commodities, software and technology (...) to Jinhua." It then adds that these license applications will be reviewed - always - with a presumption of denial.
This is an interesting quote, its probably based on the potential political posturing. However, it also may be and attempt to prevent China from steal anymore IP, even is the company is desperate for partnerships with China based companies. I really dont think its actually security related, but, if it is, then Fujian is truly suspected of a violation or two by the USG.
Posted on Reply
#5
Zubasa
R0H1T said:
That's not even remotely accurate, it could be if China bans domestic "consumption" from foreign chipmakers like Micron, Samsung or SKH.
Anyway who builds a near $6 billion plant just for domestic consumption, especially from China :rolleyes:
Actually China uses a huge amount of DRAM chips, not for PCs but for their rapidly expanding Smart Phone makers.
Which is exactly what they want because Phones do not use the fastest memory, and I doubt the Chinese DRAM can reach speeds similar to Samsung anyway.
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#6
randomUser
The article states that US bans export to chinese company.

This means, that nothing can go FROM USA TO China.
But, DRAM manufactured in China CAN go to USA. It does not say Import has been banned.

China has all the knowhow how to make DRAM and they have all the components needed (China is the biggest silicone supplier).

So this ban does nothing in general. China can still build the factory and sell production worldwide, it just can't get help/support/materials or whatever from US. Which i doubt they even needed that.
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#7
R0H1T
randomUser said:
The article states that US bans export to chinese company.

This means, that nothing can go FROM USA TO China.
But, DRAM manufactured in China CAN go to USA. It does not say Import has been banned.

China has all the knowhow how to make DRAM and they have all the components needed (China is the biggest silicone supplier).

So this ban does nothing in general. China can still build the factory and sell production worldwide, it just can't get help/support/materials or whatever from US. Which i doubt they even needed that.
What exports would that be, apart from tech/IP & patents in general? This is the same as the ZTE ban, it should basically cripple exporting these chips anywhere outside China.

That's not true either, there is a litigation pending between Micron & UMC+Fujian Jinhua Integrated Circuits for stealing trade secrets.
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#8
FordGT90Concept
"I go fast!1!11!1!"
Indeed, it's weird: https://www.commerce.gov/news/press-releases/2018/10/addition-fujian-jinhua-integrated-circuit-company-ltd-jinhua-entity-list

"... Department of Commerce has taken action to restrict exports to Fujian Jinhua Integrated Circuit Company, Ltd. ..."

"Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems." --Wilbur Ross, Secretary of Commerce

But that doesn't make any sense. How is exporting to Fujian a threat to US "military systems?"

And look at the time line: notice published on October 29, effective October 30.
Posted on Reply
#9
R0H1T
FordGT90Concept said:
Indeed, it's weird: https://www.commerce.gov/news/press-releases/2018/10/addition-fujian-jinhua-integrated-circuit-company-ltd-jinhua-entity-list

"... Department of Commerce has taken action to restrict exports to Fujian Jinhua Integrated Circuit Company, Ltd. ..."

"Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems." --Wilbur Ross, Secretary of Commerce

But that doesn't make any sense. How is exporting to Fujian a threat to US "military systems?"

And look at the time line: notice published on October 29, effective October 30.
I'm guessing this is to limit exports of the the said entity, though it's not 100% clear from the language they've put up in the press release ~
When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security. Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems,” Secretary of Commerce Ross said.

Pursuant to Section 744.11(b) of the EAR, the Entity List identifies entities reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. The EAR imposes additional license requirements on, and limits the availability of most license exceptions for, exports, re-exports, and transfers (in-country) to listed entities.

As a result of adding Jinhua to the Entity List, a license is required for all exports, re-exports, and transfers of commodities, software and technology subject to the EAR to Jinhua. Such license applications will be reviewed with a presumption of denial.
https://www.commerce.gov/news/press-releases/2018/10/addition-fujian-jinhua-integrated-circuit-company-ltd-jinhua-entity-list
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#10
buggalugs
Many Chinese companies are being banned all over the world. Almost nothing from China is secure.
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#11
DeathtoGnomes
buggalugs said:
Many Chinese companies are being banned all over the world. Almost nothing from China is secure.
tell that to SuperMicro. :D:D
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#12
Vayra86
buggalugs said:
Many Chinese companies are being banned all over the world. Almost nothing from China is secure.
That is the image that they want you to have of China yes. Because if China is bad, local looks better.

Its so incredibly obvious, I can't see how people miss it. That doesn't mean nothing from China is bad, but right now there is a witch hunt going on with no basis, and only very rare or unseen evidence. There's clearly a hammer looking for new nails to slam, and the hammer is called USA. Meanwhile, China simply wants business as usual, stability and growth. Take some time to absorb those two ideas and put them in the context of any Western originating China news. These bans are highly questionable.
Posted on Reply
#13
FordGT90Concept
"I go fast!1!11!1!"
This is what started it: https://www.stripes.com/news/exchanges-ordered-to-pull-chinese-smartphones-over-security-risks-1.525026
In February, the director of national intelligence, along with the heads of the CIA, FBI, National Security Agency, Defense Intelligence Agency and National Geospatial-Intelligence Agency all testified before a Senate committee that Americans should not use Huawei or ZTE products because of security concerns.
Do you honestly believe all of those people could be unanimously coerced into saying the same thing if there wasn't merit to what they said?
FBI Director Christopher Wray testified that Huawei products give the Chinese government the ability to gather or alter sensitive corporate and military information undetected.
That statement was made under oath.

Why is the Pentagon not being forthcoming about technical details? Probably because the NSA is using the same exploits to spy on China.


This is off topic though. I still don't understand how exporting to Fujian is a security threat.
Posted on Reply
#14
DeathtoGnomes
FordGT90Concept said:
(1)Why is the Pentagon not being forthcoming about technical details? Probably because the NSA is using the same exploits to spy on China.


This is off topic though. (2)I still don't understand how exporting to Fujian is a security threat.
1. The pentagon is not known for being open and honest when it comes to national security discussion. Stop asking why, it falls on deaf ears there. If you really must know file a FOIA request.

2. exporting to Fujian is like exporting your creditcard and ssn because they just want to know it, since its you dont understand what a glodal security threat is, you should be fine with the results. :eek:
Posted on Reply
#15
FordGT90Concept
"I go fast!1!11!1!"
Fair enough. You're right that I'm sure the Pentagon has their reasons but telling service members to not use devices already in their possession (Huawei and ZTE) is a far cry from exporting stuff to a company (Fujian). The only thing that makes sense to me is that Fujian is a front for an intelligence operation.


Edit: Just ran across this article which may explain why USA is doing what it can to styme Chinese tech companies:
China exports its restrictive internet policies to dozens of countries: report
Chinese technology companies have provided or are set to provide internet equipment to at least 38 of the tracked countries and artificial intelligence systems for law enforcement in 18 countries, the report said.
"Equipment" for internet censorship not unlike the Great Firewall of China.
Posted on Reply
#16
quadibloc
R0H1T said:
especially if China isn't able to export their production.
At the moment, what is being banned is imports from the United States - presumably of the advanced technology needed to produce memory. So their problem won't be the ability to export their production, it will be the ability to produce anything in the first place.

Of course, when the U.S. banned the export of Xeon chips to China for their supercomputers, it responded by developing their own chips (based on the Alpha design from the U.S. originally). So no doubt they will try to make homegrown technology for this purpose, if they can't get it from Japan or Korea.
Posted on Reply
#17
DeathtoGnomes
FordGT90Concept said:
"Equipment" for internet censorship not unlike the Great Firewall of China.
Good to see a sense of humor.

quadibloc said:
At the moment, what is being banned is imports from the United States - presumably of the advanced technology needed to produce memory. So their problem won't be the ability to export their production, it will be the ability to produce anything in the first place.

Of course, when the U.S. banned the export of Xeon chips to China for their supercomputers, it responded by developing their own chips (based on the Alpha design from the U.S. originally). So no doubt they will try to make homegrown technology for this purpose, if they can't get it from Japan or Korea.
Should be easy for China to develop their own chips, they stole enough Intellectual Property to do it.
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#18
trog100
China is now the "enemy" the US will hinder its progress in anyway it can.. the details are irrelevant.. :)

trog
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