Biden Bans YMTC From China, Cracks Down On The AI Chip Industry

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Credit: Brian Kostiuk/Unsplash

The Biden administration expanded its campaign against China’s semiconductor industry on Thursday by adding the Chinese memory chipmaker YMTC and 21 “significant” Chinese players in the artificial intelligence chip sector to a trade blacklist, as reported by Reuters.

Blacklisted Chinese tech

Fears that YMTC could redirect American technology to previously blacklisted Chinese tech giants Huawei Technologies Co Ltd [RIC:RIC:HWT.UL] and Hikvision led to the addition of YMTC to the list (002415.SZ). The action, which was announced in the Federal Register, will prevent YMTC’s suppliers from sending it American goods without a challenging licence.

The United States government has effectively blocked access to technology produced anywhere in the world using U.S. machinery for the 21 Chinese AI chip companies that have been added to the trade blacklist, which also includes Cambricon Technologies Corp (688256.SS) and CETC. These companies will face a harsher penalty.

PXW Semiconductor Manufactory Co., a startup chip factory supported by the Shenzhen municipal government and run by a former Huawei executive, was another famous name.

Thea Kendler, assistant secretary of commerce for export administration, said in a statement that “U.S. national security interests necessitate that we act decisively to deny access to advanced technologies” as the Chinese government works to reduce barriers between its military and civilian sectors.

Requests for comment from YMTC, Cambricon, CETC, and PXW did not immediately elicit a response. After being separated from the official think tank China Academy of Sciences in 2016 and going public four years later, Cambricon’s shares plunged 6% on Friday at market open.

The American government, according to the Chinese embassy in Washington, is engaging in “blatant economic coercion and bullying in the realm of technology,” disrupting regular business dealings between Chinese and American corporations and endangering the stability of global supply chains.

It said, “China will steadfastly protect the legitimate rights and interests of Chinese firms and institutions.”

Technological and military advancements

The action expands upon broad export limits placed on Beijing in October to halt Beijing’s technological and military advancements, including efforts to restrict China’s access to American chipmaking gear and cut it off from specific semiconductors created anywhere in the world with American machinery.

Additionally, it occurs as Congress works to complete legislation that would forbid the United States government from purchasing goods built with semiconductors from YMTC, Chinese memory chipmaker CXMT, or China’s top chip maker, SMIC.

The Shanghai Micro Electronics Equipment Group Co Ltd (SMEE), China’s sole lithography business, was among the nine Chinese firms that the Commerce Department purportedly targeted on Thursday for allegedly attempting to promote China’s military modernisation.

A request for comment from SMEE was not immediately complied with.

For allegedly taking part in “China’s campaign of repression, widespread arbitrary imprisonment, and high-tech surveillance against Uyghurs,” added Tianjin Tiandi Weiye Technologies of China. An inquiry for feedback from Tiandi did not immediately receive a response.

The U.S. trade blacklist, often known as the entity list, was expanded to include YMTC’s Japan-based subsidiary and a total of 35 Chinese firms.

Unverified list

The news that was released on Thursday wasn’t all awful for Beijing. A subsidiary of Wuxi Biologics, which produces components for the COVID-19 vaccine made by AstraZeneca (AZN.L), as well as 26 other Chinese firms was taken off the so-called unverified list by the Biden administration as a result of successful site visits.

YMTC and SMEE, two of the Chinese businesses that were taken off the unverified list, were added to the entity list.

Such a move was reportedly in the works, according to Reuters on Wednesday. Prior to a different division of the company being taken off the unverified list in October, Wuxi Biologics let American officials tour the facility earlier this year, according to a separate report from Reuters.

Requests for comment from Wuxi were not answered.

In order to determine whether a company can be trusted to receive sensitive U.S. technology exports and inspections, which in China require authorization from the country’s commerce ministry, the United States must conduct on-site visits and inspections. Companies that are unable to do so are added to the unverified list.

U.S. suppliers are required to conduct further research before shipping to the targeted organisations as a result of being put on the unverified list.

Officials from the Commerce Department have credited the October rule as the reason Beijing has cooperated more with site inspections. According to that law, Washington may add a company to the entity list after 60 days if the host country hinders American officials from conducting site checks at businesses on the unverified list.

New policy

Due to the United States inability to undertake site visits, the Commerce Department on Thursday added nine Russian organisations to the entity list and removed them from the unverified list in accordance with the new policy.

Chuck Schumer, the top Senate Democrat, applauded the latest sanctions against YMTC, which Reuters reported was being investigated for allegedly breaking U.S. export laws by providing chips to Huawei without a licence.

The Biden Administration has to move quickly, he said in a statement, “to prevent YMTC from acquiring even an inch of a military or economic edge.” YMTC “poses an immediate threat to our national security,” he added.

 

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Source: Reuters

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