Last week, the Bureau of Industry and Security (BIS), within the Dept. of Commerce, added a dozen Chinese companies on the Entity List over national security and foreign policy concerns. The action comes as we await confirmation of Alan Estevez to assume leadership of the relatively unknown, but increasingly crucial agency.
One of these companies is semiconductor maker New H3C Technologies (H3C), which is partly owned by U.S. company Hewlett Packard Enterprise. For its 2020 fiscal year, HPE recorded about $737 million in sales to H3C. This is equal to about 3% of total HPE revenues – as well as purchases amounting to roughly $215 million.
Additionally, HPE’s Chinese partner is H3C, Tsinghua Unigroup, which CTT has repeatedly flagged as a supplier of the People’s Liberation Army (PLA). Further Tsinghua Unigroup partially owns Yangtze Memory Technologies Co. (YMTC), which China Tech Threat has also raised, concerns about citing its contribution to the PLA and alarming uses of state subsidies to support espionage and anticompetitive practices against competitors.
While “HPE says the New H3C Semiconductor Technologies subsidiary was set up about two years ago for research-and-development purposes and that it does not conduct business in the US market,” it is yet another sign of dangerous Chinese ties that are spread far and wide in the U.S. market, often without consumers knowledge.
In addition to H3C, there were 11 other Chinese companies added to the Entity List. A press release noted that these entities were being added to the list “as part of the Department of Commerce’s efforts to prevent U.S. emerging technologies from being used for the PRC’s quantum computing efforts that support military applications…these PRC-based technology entities support the military modernization of the People’s Liberation Army and/or acquire and attempt to acquire U.S. origin-items in support of military applications. Today’s action will also restrict exports to PRC producers of electronics that the support the People’s Liberation Army’s military modernization efforts.”
U.S. Secretary of Commerce Raimondo noted: “Global trade and commerce should support peace, prosperity, and good-paying jobs, not national security risks. Today’s actions will help prevent the diversion of U.S. technologies to the PRC’s and Russia’s military advancement…The Department of Commerce is committed to effectively using export controls to protect our national security.”
“This is a sensible move and an important reminder of the scope and scale of China’s efforts to achieve technological breakthroughs that erode US national security,” CNAS’ Martijn Rasser noted. Mr. Rasser has also noted the “strong case” for YMTC to be added to the Federal Communications Commission’s (FCC) Covered List for similar concerns around national security.
China Tech Threat applauds BIS’ action against these dangerous companies and urges that this effort to root out and punish other Chinese companies contributing to the PLA continues and expands to include other key entities, such as YMTC and CXMT, another Chinese semiconductor fab. Without clear action against these companies, the U.S. greatly risks cutting edge technologies being used against us when incorporated in the PRC weaponry.