US defense bill proposes examination of Apple display supplier

By Stephen Nellis

SAN FRANCISCO (Reuters) -A measure added into a massive U.S. defense spending bill in recent weeks will, if passed, ask the Pentagon to determine whether one of Apple's display suppliers should be listed as a Chinese military company.

Being on the list does not block companies from doing business in the U.S. but will in coming years block them from being part of the U.S. military's supply chain.

The bill, known as the National Defense Authorization Act, was approved in July by key committees in both houses of the U.S. Congress. The final bill, considered a "must-pass" because it funds the U.S. military, is expected to become law later in the year.

When the bill was approved by the U.S. House of Representatives Armed Services Committee, a newly added amendment for the first time asked the U.S. Defense Department to consider whether BOE Technology Group Co, listed on Apple's official suppliers list, should be added to a list of firms that allegedly aid China's military.

BOE and Apple did not respond to requests for comment.

Craig Singleton, a China expert at the Foundation for Defense of Democracies, a Washington think-tank, said Beijing had offered billions of dollars in subsidies, tax breaks and loans to help firms such as BOE dominate global panel production.

"This creates a single‑source vulnerability that could be easily exploited to disrupt or degrade U.S. military operations, not to mention undermine commercial supply chains, during a conflict or period of heightened bilateral tension with Beijing," Singleton added.

A study published last month by New York-based NERA Economic Consulting and commissioned by BOE's U.S. subsidiary found that the display industry, which includes major Korean players such as Samsung Electronics and LG Electronics, remains highly competitive, with no single player capable of significantly affecting global prices.

"There is no credible risk of a supply chain disruption by mainland China display manufacturers," the report said.

(Reporting by Stephen Nellis in San Francisco; Editing by Nia Williams)

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