US expands export bans on Chinese tech firms over 'security risks'
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The US expanded its entity list, targeting Chinese companies like Nettrix and Inspur Group, citing national security concerns over their involvement in AI and military technologies.
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A sign to an Nvidia office building is shown in Santa Clara, California, on August 7, 2024. (AP)
The Trump administration added 80 companies and organizations to a list of companies that are banned from buying US technology and other exports due to "national security concerns," a New York Times (NYT) report on Tuesday revealed.
The measure targets major buyers of Nvidia, Intel, and AMD chips while addressing loopholes long criticized by Trump-era officials for enabling Chinese firms to progress technologically despite US restrictions.
What is Nettrix Information Industry?
According to the report, Nettrix Information Industry, one of the newly listed companies, was the subject of a 2024 NYT investigation revealing how certain Chinese executives bypassed US restrictions designed to block China from obtaining advanced AI chips.
Another company on the list, Nettrix, was founded by former Sugon executives—Sugon being a supplier of advanced computing to the Chinese military. As explained in the report, Nettrix is now one of China’s largest computer server manufacturers for AI development.
In 2019, the US placed Sugon on its “entity list", limiting exports due to "national security concerns."
Six months later, according to an NYT investigation, former Sugon executives established Nettrix, leveraging Sugon’s technology and retaining some of its customers. The investigation allegedly showed that Nettrix’s owners shared a facility in eastern China with Sugon and other affiliated companies.
However, after the US imposed restrictions on Sugon, Nvidia, Intel, and Microsoft swiftly established ties with Nettrix, according to the investigation.
Role of WireScreen
The report revealed that business records from WireScreen, a business intelligence platform, linked Sugon, Nettrix, and the Chinese Academy of Sciences—a key research institution involved in chip development, parts of which are under US sanctions due to "national security concerns."
Procurement documents also indicated that Nettrix provided servers to universities with defense labs and cybersecurity firms collaborating with the military and China’s Great Firewall, among other customers.
The Trump administration added 54 Chinese companies and organizations to the entity list on Tuesday, along with over two dozen from Iran, Pakistan, South Africa, the UAE, and Taiwan.
According to the administration, these entities are allegedly linked to activities such as supporting Pakistan's nuclear and missile programs, advancing China’s quantum technology and hypersonic weapons capabilities, and attempting to bypass US restrictions on Iran.
Inspur group
The report stated that on Tuesday, the Trump administration also extended its sanctions to several subsidiaries of Inspur Group, a major customer of Intel and other US tech companies. The administration claimed these entities had assisted in the development of supercomputers for the Chinese military and attempted to acquire US technology to support that effort.
Moreover, in 2023, the Biden administration added Inspur’s parent company to the entity list, but US companies resumed dealings with its subsidiaries after a brief pause, according to the report, adding that Inspur Group also moved its registered address close to its parent company.
Trade experts note that entity listings can be easily bypassed as they are tied to specific names and addresses.
The new entity listings will significantly impact the Chinese server market, which is vital for AI development. Additionally, the Trump administration expanded global penalties, aiming to prevent companies from circumventing US rules by exporting to Chinese firms through third countries.
