U.S. Adds Export Restrictions to More Chinese Tech Firms Over Security Concerns

The Trump administration announced on Tuesday that it has added 80 companies and organizations to a list of entities that are prohibited from purchasing American technology and other exports due to national security concerns. The majority of the companies targeted are Chinese firms that have been significant buyers of American chips from companies like Nvidia, Intel, and AMD. The move aims to close loopholes that have allowed Chinese companies to continue advancing technologically despite U.S. restrictions.

One of the newly added companies, Nettrix Information Industry, was the subject of a 2024 investigation by The New York Times, which revealed how some Chinese executives had evaded U.S. restrictions to acquire advanced chips for artificial intelligence development. Nettrix, a major manufacturer of computer servers for artificial intelligence production, was founded by former executives of Sugon, a company that provided advanced computing to the Chinese military and assisted in surveillance activities in Xinjiang.

In 2019, Sugon was added to the U.S. “entity list,” restricting exports due to national security concerns. Following this restriction, the executives of Sugon formed Nettrix, utilizing Sugon’s technology and customer base. The investigation also uncovered that Nettrix shared facilities with Sugon and other related companies in China. Furthermore, it was found that Nettrix established partnerships with Nvidia, Intel, and Microsoft following the restrictions imposed on Sugon by the United States.

Records obtained through WireScreen revealed that Sugon and Nettrix have connections to the Chinese Academy of Sciences, a research institution involved in developing chip technology. Nettrix was found to have sold servers to universities hosting defense laboratories, cybersecurity firms working with the military, and other customers. The Trump administration expanded the entity list on Tuesday, adding 54 Chinese companies and organizations, as well as entities from other countries.

Howard Lutnick, the commerce secretary, stated, “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives.” The Trump administration also imposed penalties on subsidiaries of Inspur Group for aiding the development of supercomputers for the Chinese military and attempting to acquire U.S. technology to support these efforts.

Despite the Biden administration adding Inspur’s parent company to the entity list in 2023, U.S. companies continued to engage with its subsidiaries. Trade experts have noted that companies can easily circumvent entity listings by changing names and addresses. The latest entity listings will impact a significant portion of the Chinese server market, with additional restrictions to prevent companies from bypassing U.S. rules by exporting products from other countries to Chinese firms.

The entity list, originally created to prevent adversaries from developing weapons of mass destruction, has been increasingly utilized by presidents in recent years as a tool for national security. Other entities added to the list on Tuesday include the Beijing Academy of Artificial Intelligence, accused of attempting to acquire A.I. models and chips in support of China’s military modernization efforts.