November 11, 2019
The Trump administration’s placement of several Chinese technology companies on a U.S. blacklist last month continues to leave many questions hanging over the heads of security managers, end users, integrators and others who use their products.
The U.S. Department of Commerce placed 28 organizations—including eight technology providers—on its so-called Entity List in early October. This means that U.S. businesses are no longer permitted to sell vital components to the Chinese company. The administration accuses them of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang. The addition to the Entity List took place after a ban that prohibits federal agencies from purchasing their products went into effect.
The so-called “trade blacklist” includes two of the largest companies manufacturing IP video surveillance devices in the world, and two artificial intelligence (AI) startups backed by Chinese e-commerce giant Alibaba. Although the addition of these companies to the Entity List is not an outright embargo, the rule will require government approval before any U.S.-based company can sell goods to them in the future.
Analyst Danielle vanZandt, who specializes in aerospace, defense and security for Frost & Sullivan, said the move sows continued confusion for end users as to how to proceed in light of the blacklist. In the case of the surveillance providers, the 2018 ban served to confuse integrators, installers, and end-users on whether the ban was restricted to new purchases or forced sellers to end all sales and replace existing equipment with a different brand.
“So where was the ban’s line being drawn for these entities? Were they to comply or not? If so, how? Again, these questions have remained unanswered since 2018,” said VanZandt in a commentary on the blacklist. “The onus appears to be on end users and integrators to decide whether rip-and-replace strategies are the best way to comply with government rulings or to just leave the solutions in place and hope for the best.”
Steve Surfaro, Chair, SIA Public Safety Working Group, said broader global impacts are still unfolding. But in an opinion piece he noted its potential effects on chip makers and investments in artificial intelligence.
“Overall, my forecast for the impact on the industry is moderate to high,” he said in the post.