The Biden administration’s blacklisting of China’s Inspur Group Co. targets a company that US tech giants like Cisco Systems Inc., IBM Corp. and Intel Corp. have worked with to expand their footprint in the world’s second largest economy.
(Bloomberg) — The Biden administration’s blacklisting of China’s Inspur Group Co. targets a company that US tech giants like Cisco Systems Inc., IBM Corp. and Intel Corp. have worked with to expand their footprint in the world’s second largest economy.
The Commerce Department blacklisted Inspur and more than a dozen other Chinese firms on Thursday in an escalation of a tech-based conflict between Washington and Beijing. That surprise move could exert an unforeseen impact on US tech companies after years of relying on the firm for access to domestic markets.
Once a state-owned electronics factory, Inspur is one of the country’s oldest IT brands: Its transistors went into China’s first man-made satellite in 1970. The company has since blossomed into a server specialist and joined an informal club of Chinese national champions that include Huawei Technologies Co. and chipmaker Semiconductor Manufacturing International Corp.
Inspur’s clout and market reach attracted a host of foreign companies that found it difficult to crack the Chinese market. It set up joint ventures with Cisco and IBM several years ago so that their products can more easily gain Chinese approvals and pass security checks — a common practice. In return, Inspur benefits from its US partners’ longer experience in dealing with international markets.
A representative for Inspur said the company “has noticed relevant reports and is working to verify and evaluate,” and had no other comment. Spokespeople for Cisco and Intel declined to comment. Representatives for IBM didn’t reply to requests for comment.
Inspur established its JV with Cisco’s Hong Kong subsidiary in 2016 and the Chinese company owns 51% of the shares, according Tianyancha, a platform that tracks company registration information disclosed by the government. A $145 million venture with IBM’s Chinese investment arm was created two years later, with Inspur also owning 51%. It also partnered with Intel last year on cloud technologies, according to the US company’s website.
Read more: US Expands Crackdown on China With Export Ban on Inspur, BGI
It’s unclear how long Washington has kept an eye on Inspur. The Pentagon said in 2020 that it’s a company controlled by China’s military.
Inspur, which also provides cloud services, is regarded as integral to the government’s effort to replace foreign-made technology and propel domestic innovation.
Its listed arm Inspur Electronic Information Industry Co. fell its daily limit of 10% Friday, on top of losses of between 4% and 17% among other group affiliates listed in Hong Kong and mainland China.
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