August 15, 2022
US asks Chinese memory chip makers to consider action: all the details

According to four people familiar with the matter, the United States is considering limiting shipments of American chipmaking equipment to memory chip makers in China, including Yangtze Memory Technologies Co., Ltd. (YMTC), halting progress in China’s semiconductor sector and Part of a bid to protect American companies. ,

If President Joe Biden’s administration goes ahead with the move, it could also hurt South Korean memory chip giants Samsung Electronics and SK Hynix, the sources said on condition of anonymity. Samsung has two major factories in China, while SK Hynix is ​​buying Intel’s NAND flash memory chips manufacturing business in China.

If approved, the action would include halting shipments of American chipmaking equipment to factories in China that manufacture advanced NAND chips.

According to export control experts, this would mark the first US bid through export controls to target Chinese production of memory chips without specialized military applications, representing a more detailed view of US national security.

The move only seeks to protect US memory chip producers, Western Digital and Micron Technology, which together represent about a quarter of the NAND chips market.

NAND chips store data in devices such as smartphones and personal computers, and in data centers such as Amazon, Facebook and Google. The number of gigabytes of data a phone or laptop can hold is determined by how many NAND chips are included and how advanced they are.

According to two sources, as part of the action, US officials will ban the export of equipment to China to make NAND chips with more than 128 layers. LAM Research Corp. and Applied Materials, both based in Silicon Valley, are the primary suppliers of such equipment.

All sources have described the administration’s view on the matter as being at an early stage, with no proposed rules yet to be formulated.

Asked to comment on a potential move, a spokeswoman for the Department of Commerce, which oversees export controls, did not discuss potential sanctions, but noted that “the Biden administration is trying to address significant national security risks in advanced semiconductors.” focused on spoiling (China’s) efforts to build for the United States.”

fast growing company

YMTC, established in 2016, is an emerging force in the manufacturing of NAND chips. Micron and Western Digital are under pressure from low YMTC prices, as the White House wrote in June 2021 report good, That report said YMTC’s expansion and lower price offering present a “direct threat” to Micron and Western Digital. The report describes the YMTC as China’s “national champion” and a recipient of some $24 billion in Chinese subsidies.

According to a Bloomberg report, YMTC, already under investigation by the Commerce Department, has violated US export controls by selling chips to Chinese telecommunications company Huawei, for supplying the top US smartphone maker with flash memory chips. is in talks with Apple Inc.

LAM Research Corp., SK Hynix and Micron declined to comment on US policy. Samsung, Applied Materials Inc., YMTC and Western Digital Corp did not immediately respond to requests for comment.

Congress works

Tensions between China and the United States over the tech sector deepened under Biden’s predecessor Donald Trump, and have continued ever since. Reuters reported on July 8 that Biden’s administration is also considering a ban on shipments of equipment to China to make advanced logic chips, seeking to hamstring China’s largest chip maker, SMIC.

The US Congress last week approved legislation aimed at helping the United States compete with China by investing billions of dollars in domestic chip production.

Under this measure, chipmakers taking money will be banned from manufacturing or expanding certain advanced chips, including advanced memory chips, at levels set by the administration in countries including China.

According to Walt Koon of the consulting firm Yole Intelligence, YMTC accounts for about 5 percent of NAND flash memory chip production worldwide, nearly double what it was a year ago. Western Digital stands at about 13 percent and Micron at 11 percent. Coon said the YMTC would be deeply hurt by the sanctions that Biden’s administration is considering.

“If they were stuck on 128, I don’t know how they would really have a way forward,” Coon said.

Yole’s data shows production of NAND chips in China jumped more than 23 percent of the worldwide total this year, down from 14 percent in 2019, while production in the United States dropped from 2.3 percent to 1.6 percent Is. As for US companies, almost all of their chip production is done overseas.

It was unclear what effect the potential sanctions might have on other players in China. Intel, which holds a contract in China to manage operations at a factory that sells SK Hynix, is already producing memory chips with 144 layers at the Chinese site, according to an Intel press release.

© Thomson Reuters 2022

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