China's top chip gear maker sues Pentagon over blacklist, seeks removal from section 1260H list

One of China’s most prominent chip gear makers is suing the Pentagon for linking it to the People’s Liberation Army, seeking to get off a blacklist that bars business with American firms, Azernews reports, citing Bloomberg.

Advanced Micro-Fabrication Equipment Inc. alleged that the defense agency harmed the company’s business and reputation by adding the Shanghainese entity to the so-called Section 1260H list of firms linked to China’s military.

Pentagon officials took months to respond to a request for additional information, then justified their decision with evidence of an award from China’s Ministry of Industry and Information Technology, AMEC said in its lawsuit.

AMEC becomes the latest Chinese firm to try and overturn their addition to a blacklist intended to guard the US against national security threats. The company is considered one of the country’s foremost suppliers of equipment critical to semiconductor production, a key component of Beijing’s ambitions to ascend the geopolitical and technology ladder.

The US government has in past years grown increasingly concerned about what it calls China’s military-civil fusion strategy, describing that concept as regular civilian companies aiding the People’s Liberation Army in some fashion. That concern centers in particular on the country’s technology champions.

AMEC competes with top US firms including Applied Materials Inc. and Lam Research Corp. In its latest annual report, the Chinese company said some of its machines are now being used to make chips as advanced as 5 nanometers, or technology only one generation behind the most cutting-edge.

The Chinese company supplies to Huawei Technologies Co.’s production partner Semiconductor Manufacturing International Corp., Shanghai-based chipmaker Hua Hong Semiconductor Ltd., and Taiwan Semiconductor Manufacturing Co., according to Bloomberg supply chain data.

AMEC said in its complaint that its leadership is predominantly American. Its founder and chairman Gerald Yin, born in 1944, has a doctorate from UCLA and previously worked for Intel Corp., Applied Materials, and Lam, according to the annual report. Yin was identified as a US national in the company’s annual report for 2021.