US Closes Subsidiary Loophole On Dozens Of Chinese Entity List Members

The US government has initiated another crackdown on Chinese businesses skirting chip export bans, adding a few dozen new names, and offshoots of repeat offenders, to the entity list.

The Commerce Department's Bureau of Industry and Security (BIS) released two lists of fresh entries yesterday that are set to hit the Federal Register on Friday. Some 80 companies were added in a bid to hamstring China's development of high-performance, exascale and quantum computing, among other things.

"We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives," Commerce Secretary Howard Lutnick thundered. "We are committed to using every tool at the Department's disposal to ensure our most advanced technologies stay out of the hands of those who seek to harm Americans."

While not all of the entities added to the list are from China, or were implicated in trying to acquire high-end chips and other computing components from US companies, a good number of them are. There are some familiar names on the list, too.

Inspur, a Chinese server manufacturer and former frequent biz partner of US giants like Intel and IBM, which was put on the entity list in 2023, has had six of its subsidiaries added. As we noted days after Inspur was added to the list a couple of years back, US companies were still free to do business with its subsidiaries, a loophole that now appears to be closed.

"These entities are being added for their contributions to Inspur's development of supercomputers for military end use, particularly by acquiring or attempting to acquire US-origin items in support of supercomputer projects for the Chinese government and/or military," the BIS said in its addition order.

Also on the latest list is Nettrix, which was added alongside Henan Dingxin and Suma-USI Electronics, for their role in helping China develop exascale supercomputers. If those names don't sound familiar to you, another entity list member they're tied to may ring a bell: Sugon.

Sugon, maker of some of the most powerful supercomputers in China, was placed on the entity list in 2019 in a bid to slow its progress. As the New York Times found out last year, Nettrix was actually an offshoot of Sugon, which Nvidia, Intel, and Microsoft were all quick to work with when its parent was added to the entity list.

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Also new to the list for supporting the development of advanced AI models in China are the Beijing Academy of Artificial Intelligence and Beijing Innovation Wisdom Technology company.

Seven entities made the list for their role in helping China develop quantum computing technology. And Singleton Electronics and Suzhou SIP Hi-Tech Precision Electronics were also named for selling products to companies already on the entity list, including Huawei. Additionally, a few dozen earned places on the list for trying to acquire US-origin items to aid China's military modernization efforts, namely in the field of hypersonic weapons and aircraft.

Organizations understood to be helping to train Chinese military forces using US-made equipment and assisting Iran's efforts to acquire UAVs were also added.

American corporations are banned from doing business with those on the entity list unless they have permission from the Commerce Department. Even then, as many of these additions highlight, it's a constant game of whack-a-mole as China-based entities add subsidiaries that spring up to circumvent bans which some American companies continue to accommodate.

We contacted a number of US companies who have reportedly done business with subsidiaries named in this story. Nvidia declined to comment, and we didn't immediately hear back from any others. ®