AMEC, Advanced Micro-Fabrication Equipment, a Chinese chip equipment manufacturer, has been removed from the U.S. Department of Defense blacklist of firms accused of links to China’s military, nearly a year after its inclusion. The Pentagon removed the Shanghai-based company from its list of “Chinese Military Companies operating in the US” on December 13, as stated in its latest filing with the U.S. Federal Register.

AMEC’s shares rose by 4.35% on Wednesday following its exclusion from the Pentagon’s list of Chinese firms allegedly linked to Beijing’s military. The Department of Defense did not give a reason for such a decision.

In January, the DOD (Department of Defense) included AMEC and several other Chinese tech companies on the list, citing them as threats to U.S. national security. Companies on the list are prohibited from supplying goods and services to the DOD.

AMEC, founded in 2004 by Gerald Yin Zhiyao, a former employee of Intel, Lam Research, and Applied Materials in Silicon Valley, the company specializes in producing etching systems for semiconductor foundries.

AMEC’s exclusion from list of blacklisted companies may be a result of AMEC filing a lawsuit in the U.S. Court, against the DOD challenging its inclusion on the blacklist. In its complaint to the U.S. District Court for the District of Columbia, AMEC argued that the DOD’s decision lacked legal justification and caused the company “serious and irreparable” harm.

In addition to AMEC, Other Chinese companies have also succeeded in getting removed from the blacklist. Among them is Hesai, a Chinese manufacturer of remote sensors for smart cars, which was taken off the list, as reported by the Financial Times in August. Hesai, added to the list in January, filed a lawsuit against the DOD over the issue in May.

The removal of companies like AMEC and Hesai from the blacklist could signal a softening stance in the U.S.-China tech war, potentially reflecting a strategic move to de-escalate tensions or focus on specific priorities within the broader conflict. It might also indicate a more cautious approach by the U.S. in targeting Chinese firms, ensuring actions are backed by stronger evidence to avoid legal and diplomatic pushback.

This decision could be assessed as a part of a broader recalibration of policies to balance national security concerns with economic and geopolitical considerations. Hopefully, this decision may push China to also withdraw decisions to restrict export of critical minerals to the U.S. China has imposed strict export restrictions on “dual-use” technologies, which can be used for both civilian and military purposes, specifically aimed at the United States. These new controls strengthen previous restrictions on these metals, including a ban on shipments of antimony, gallium, and germanium to the U.S.