Sugon spin-off helps China evade US chip bans

A Chinese computer server supplier that was set up four and a half years ago to circumvent US sanctions has been accused of selling products to sanctioned Chinese firms.

Nettrix, a Beijing-based firm established in December 2019, has sold computer servers that used Intel and Nvidia’s chips and Microsoft’s software to sanctioned Chinese companies and institutions, according to a report published by the New York Times on August 4.

The report said all of Nettrix’s top executives came from Sugon, which was sanctioned by the US Commerce Department’s Bureau of Industry and Security (BIS) in June 2019. It said the executives are still sharing a complex with Sugon and other companies owned by the Chinese Academy of Sciences (CAS) in Kunshan, Suzhou.

Citing procurement documents, the New York Times report said Nettrix has sold servers to several of the same organizations as Sugon while its customers also include universities that host defense laboratories and cybersecurity firms that work with the military and on China’s Great Firewall.

Nettrix said in a statement that it did not help Sugon bypass US sanctions, and it is not part of a network connected to the CAS. It stressed that its sale did not break any rules. Sugon said it had laid off hundreds of employees after it was sanctioned by the US in 2019.

Public information gathered by Asia Times showed that Qin Xiaoning, who was praised as one of 14 “outstanding” Chinese Communist Party members in 2018, led about 200 former Sugon employees to form Nettrix in December 2019 in order to maintain access to US processors. She was rewarded in an alternative way in 2022.

Qin and Nettrix’s Vice President Wei Bingqing and Chief Technology Officer Zhao Lei had worked for Sugon, or