Insights break down a Kharon investigation and why it matters, in 3 minutes or less.
The U.S. added the Chinese company PNC Process Systems Co., Ltd. to the Bureau of Industry and Security’s (BIS) Entity List in December, citing its role in the development or production of integrated circuits for military applications. The BIS list restricts the sale of certain U.S.-made technologies to entities linked with national security concerns.
For PNC Process Systems, those concerns involve the risk of diversion to China’s military. Kharon found that its risky dealings extend not only to other BIS-listed entities but also stateside, where it has multiple connections to a U.S.-based laser company.
INSIDE THE NETWORK: PNC Process Systems has broad ties to China’s military-industrial complex. One of its significant clients is the Semiconductor Manufacturing International Corporation (SMIC), which is recognized as China's largest contract-chip manufacturer. Another is Yangtze Memory Technologies Co., Ltd., China’s leading memory-chip manufacturer. BIS described both of these entities as supporting military activities and other listed entities.
At least 10 of PNC Process Systems’ subsidiaries in China have been added to the Entity List, too.
U.S. TIES: Hao Zhao is a minority owner of PNC Process Systems and a former deputy general manager and director. Zhao is now the manager and director of QPC Lasers, a company based in Los Angeles that, according to its website, produces diode lasers in medicine and defense.
The two companies share a vendor relationship as well, Kharon found. Trade data indicate that during fiscal year 2023, QPC Lasers sold to PNC Process Systems nearly $160,000 (RMB 1,159,599) in goods. In FY 2024, PNC Process Systems budgeted an “approved transaction amount” of another $1.4 million (RMB 10,000,000) to purchase products from QPC Lasers. It is not known what portion of these transactions actually occurred and whether any happened after PNC’s addition to the Entity List.
CONNECTING THE DOTS: QPC Lasers shares its address, management and a LinkedIn page with a company called Laser Operations LLC.
Laser Operations LLC manufactures laser chips for QPC Lasers. According to Treasury Department records, the Department of Defense awarded Laser Operations LLC 24 contracts between 2010 and last year, primarily for components for high-power lasers.
The U.S. added the Chinese company PNC Process Systems Co., Ltd. to the Bureau of Industry and Security’s (BIS) Entity List in December, citing its role in the development or production of integrated circuits for military applications. The BIS list restricts the sale of certain U.S.-made technologies to entities linked with national security concerns.
For PNC Process Systems, those concerns involve the risk of diversion to China’s military. Kharon found that its risky dealings extend not only to other BIS-listed entities but also stateside, where it has multiple connections to a U.S.-based laser company.
INSIDE THE NETWORK: PNC Process Systems has broad ties to China’s military-industrial complex. One of its significant clients is the Semiconductor Manufacturing International Corporation (SMIC), which is recognized as China's largest contract-chip manufacturer. Another is Yangtze Memory Technologies Co., Ltd., China’s leading memory-chip manufacturer. BIS described both of these entities as supporting military activities and other listed entities.
At least 10 of PNC Process Systems’ subsidiaries in China have been added to the Entity List, too.
U.S. TIES: Hao Zhao is a minority owner of PNC Process Systems and a former deputy general manager and director. Zhao is now the manager and director of QPC Lasers, a company based in Los Angeles that, according to its website, produces diode lasers in medicine and defense.
The two companies share a vendor relationship as well, Kharon found. Trade data indicate that during fiscal year 2023, QPC Lasers sold to PNC Process Systems nearly $160,000 (RMB 1,159,599) in goods. In FY 2024, PNC Process Systems budgeted an “approved transaction amount” of another $1.4 million (RMB 10,000,000) to purchase products from QPC Lasers. It is not known what portion of these transactions actually occurred and whether any happened after PNC’s addition to the Entity List.
CONNECTING THE DOTS: QPC Lasers shares its address, management and a LinkedIn page with a company called Laser Operations LLC.
Laser Operations LLC manufactures laser chips for QPC Lasers. According to Treasury Department records, the Department of Defense awarded Laser Operations LLC 24 contracts between 2010 and last year, primarily for components for high-power lasers.
Kharon users can explore PNC Process System’s connections in greater detail using the ClearView platform
THE BOTTOM LINE: U.S. export controls are designed to prevent sensitive technologies from reaching listed entities with military ties. The PNC Process Systems supply chain suggests a potential risk of military-end-use products from companies that supplied U.S. defense flowing into restricted Chinese companies.
