US imposes restrictions on Chinese tech firm

China established Jinhua in February 2016 in a bid to make its own home-produced chips.

WASHINGTON (AFP) - The US Commerce Department on Monday targeted a Chinese tech company with restrictions to cut off access to US technology, saying the firm could harm US security.

President Donald Trump has painted China as an economic threat to the United States and American companies and based his aggressive tariff strategy on the goal of preventing the country from becoming dominant in key technology sectors.

The new restrictions mean US firms will need special approval to export products intended for use by state-owned Fujian Jinhua Integrated Circuit Company, according to a statement.

The firm is nearing completion of substantial production capacity for dynamic random access memory (DRAM) integrated circuits, likely to be based on US-technology.

However, that production "threatens the long term economic viability of US suppliers of these essential components of US military systems," the Commerce Department said.

"When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security," Commerce Secretary Wilbur Ross said in a statement.

He said the export restrictions would limit Jinhua’s "ability to threaten the supply chain for essential components in our military systems."

China established Jinhua in February 2016 in a bid to make its own home-produced chips, with the firm investing 37 billion yuan ($5.6 billion) that year to build a production line.

Semiconductors are among China’s biggest imports, rivaling oil, and have become a stark reminder of its dependence on US technology.

Earlier this year, Washington banned Chinese telecom and smartphone giant ZTE from purchasing crucial US components for seven years, threatening its survival, as punishment for breaking US export controls.

In a politically charged settlement, Washington then allowed ZTE to resume imports under tough conditions.