The Trump administration has added a Chinese memory chip maker called ChangXin Memory Technologies (CXMT) to a Pentagon blacklist. This blocks US companies from doing business with CXMT and sends a signal to global technology companies: buy from this Chinese firm and you face legal and regulatory risk. Reuters reported that CXMT became a target after researchers found a chip made by Taiwan inside a Huawei phone — a discovery that prompted US lawmakers to take action.

CXMT makes memory chips — the components that computers and phones use to temporarily store information while they are running. Think of memory chips as a desk where your computer spreads out its active work; when the computer shuts down, the desk clears. China wants to build its own memory chip makers instead of relying on South Korea and the United States.

More Companies Will Follow

CXMT is not the only Chinese chip maker facing restrictions. The Trump administration plans to blacklist several more Chinese chipmakers, according to the Financial Times. The administration also created a new rule that extends blacklist status to subsidiaries — essentially, if a parent company is blacklisted, all of its owned companies are blacklisted too. FT

This subsidiary rule is important because Chinese companies had historically worked around restrictions by creating separate legal entities. The new rule closes that loophole.

A Pattern That Started Years Ago

These blacklisting efforts did not start recently. Congress's Research Service traces the US strategy back to 2018, when Washington began systematically blocking Chinese access to cutting-edge semiconductor technology. The effort has continued through multiple presidents — through blacklists, export restrictions, and equipment controls. China responded in 2019 by creating its own blacklist, though it has used it more sparingly.

A Playbook in Action

The US has used this playbook before. When it pressured Apple not to use chips from another Chinese company, Yangtze Memory Technologies (YMTC), Apple listened and stopped planning to use their chips in iPhones sold globally. FT Apple's decision meant YMTC lost access to one of the world's largest and most valuable markets.

CXMT faces a similar situation. Its biggest potential customers — cloud companies, server makers, and phone manufacturers — all care deeply about staying on the right side of US regulators. The Pentagon blacklist makes them think twice about buying from CXMT.

What makes this complicated is that technology companies source chips from many suppliers across the globe. The growing list of blacklisted companies and their subsidiaries is creating a puzzle for legal and procurement teams. They need to understand not just which companies are blacklisted, but also what companies those blacklisted firms own — and that gets complex fast. Over time, this will probably reshape where companies buy their chips from.

The broader picture is straightforward: the US and China are building separate chip ecosystems. Each new blacklist, each new rule, each decision by a major tech company to drop a Chinese supplier makes that separation more permanent and more difficult to reverse.