When the U.S. blacklisted six Chinese entities last month in response to a suspected spy balloon’s traversing the country, a little-known tech firm in Northern California had reason to pay particularly close attention.
AXT Inc. has extensive ties to China that go beyond its manufacturing facilities there. The company owns an 85% stake in a Chinese subsidiary that produces materials for semiconductors and has counted as one of its biggest customers a giant state-owned defense firm linked to Beijing’s surveillance balloon program, according to AXT’s filing to the Securities and Exchange Commission in August.
A division of the defense firm, China Electronics Technology Group Corp., or CETC, was among the Chinese companies the Biden administration blacklisted for providing “support” to the People’s Liberation Army’s aerospace programs. That was only the latest U.S. government move against CETC — at least 20 of its subsidiaries and divisions have been added to the so-called entity list since 2018.
The entity list identifies foreign firms deemed to pose risks to U.S. national security and imposes severe restrictions on U.S. companies seeking licenses to export goods to them.
It’s not clear whether AXT’s subsidiary sold materials directly to any of the blacklisted parts of CETC.
AXT’s SEC filing doesn’t specify which divisions of CETC its subsidiary dealt with, and the company didn’t respond to multiple requests for comment.
There’s no indication that AXT is violating any U.S. laws, but its previously unreported ties to the Chinese defense conglomerate highlight the broader challenge of preventing U.S. technology and know-how from ending up in the hands of China’s military.
“The two economies are very intertwined in a way that others are not right now,” said Emily Benson, a senior fellow at the Center for Strategic and International Studies, a Washington think tank. “And so the more intertwined you are necessarily means the more complex…
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