The chip maker caught in US assault on China’s tech ambitions

For a sense of the damage Donald Trump can inflict on China with export controls, take a trip to the city of Jinjiang on the country’s southeastern coast.

That is where Fujian Jinhua Integrated Circuit Co built a US$6 billion plant to produce semiconductors as part of China’s goal of making the country a self-sufficient technology powerhouse. But after the US President barred exports to the company, its dream is now in tatters with consultants from American suppliers gone, the factories silent and workers rattled.

Less than a month ago, Jinhua was full-speed ahead on an enormous undertaking financed by the local government that blanketed its corner of the city with bristling power plants hulking workers’ dormitories and modern research labs. It was within months of a deadline to kick off full-scale production of some 60,000 wafers a month, a key step to giving China a competitive producer of memory chips used in smartphones.

Then the US Justice Department accused it of stealing American technology, and the Department of Commerce slammed the door on purchases of the chip manufacturing gear it needed to hit that milestone. Expansion work halted as its American and even European suppliers skipped town. Now, uncertainty shrouds a company President Xi Jinping has touted as one of three future domestic champions of chip production.

“No one here knows for sure what’s next, not even the local government officials,” one engineer told Bloomberg News on condition of anonymity. “Only Xi Jinping and Donald Trump can save us now. We only hope the government sees us as important as ZTE.”

While the Trump administration can reverse course – as it did with a similar moratorium on ZTE Corp – the case illustrates the ease with which Washington can derail China’s efforts. That may strengthen the mainland’s resolve to build its own chip capabilities so it can – once and for all – shake off a reliance on US$200 billion of annual imports.