(Bloomberg) -- The Trump administration will impose restrictions on exports to Chinese chipmaker Fujian Jinhua Integrated Circuit Company, Ltd. for national security reasons, the Commerce Department said Monday.
According to Commerce, Jinhua “poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States.”
“Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems,” Commerce Secretary Wilbur Ross said in the statement.
As a result, a license is required for all exports, re-exports and transfers of commodities, software and technology subject to the Export Administration Regulations. Such license applications will be reviewed with a presumption of denial, Commerce said.
The development is adding pressure to the already fragile relationship between the world’s two largest economies, which have been engaging in an escalating trade war for months. The two have imposed tariffs on about $360 billion worth of two-way trade on each other.
Derek Scissors, a China expert at the American Enterprise Institute, said the company was one of China’s potential national champions in the semiconductor industry and is in a dispute with its main competitor, U.S.-based chipmaker Micron Technology Inc (NASDAQ:MU).
While the decision would mainly help Micron in the short term, the administration is trying to set a precedent for how it treats Chinese state-owned enterprises in the long run, he said.