The department said Friday it will include Sugon, the Wuxi Jiangnan Institute of Computing Technology, Higon, Chengdu Haiguang Integrated Circuit and Chengdu Haiguang Microelectronics Technology along with the DBAs of these five companies to its growing list of sanctioned Chinese tech companies. The administration under President Donald Trump claims these businesses are developing supercomputers that include military applications, according to Reuters.
The administration’s list of Chinese companies it considers a "threat" already includes China’s tech giant, Huawei, well on its way to releasing its 5G technology in China. Claiming the company, which took in US$105.1 billion in sales in 2018, was a national security threat, Trump had Huawei banned from selling technological equipment in U.S. territory last month.
This decision prohibits the Chinese company from making deals with U.S.-based companies such as Facebook, Google, Qualcomm or Intel. For Huawei users, such restrictions imply their devices cannot use technology or applications generated from U.S. companies, such as Androids.
During further trade talks Thursday between the two nations, China says three main sticking points yet to be resolved. They are the removal of tariffs imposed in the trade war, the scale of goods purchases from the U.S. that China will make to help reduce the trade imbalance between the two, and the need for a "balanced" text for any trade deal. Those "matters of principle" cannot be compromised, a Chinese government spokesperson said.
It’s uncertain what will be the fallout of the newly sanctioned companies, but so far, in response the the actions taken against Huawei, the Chinese government is already drafting its own cybersecurity regulations that will be released for public consult. The draft, according to Forbes, states that "in order to … maintain national security, (companies purchasing) network products and services that affect or may affect national security" will need to evaluate the national security risk before doing so.”
Last week, U.S. chipmaker Broadcom said that it expects to lose US$22.5 billion in says during 2019 because of the administration’s move to keep Huawei out of the U.S. market.