According to four people with knowledge of the situation, the United States is considering restricting shipments of American chipmaking equipment to memory chip manufacturers in China, including Yangtze Memory Technologies Co Ltd, in an effort to halt China’s advancements in the semiconductor industry and protect American companies.
According to the individuals, who spoke on the condition of anonymity, if President Joe Biden’s administration moves forward with the decision, it could also impact South Korean memory chip giants Samsung Electronics Co Ltd and SK Hynix Inc. While SK Hynix Inc. is purchasing Intel Corp.’s Chinese NAND flash memory chip manufacturing operations, Samsung owns two sizable factories in the country.
If the crackdown is authorised, advanced NAND chip facilities in China would not be able to receive equipment made in the United States for chip production.
According to export control specialists, it would be the first attempt by the United States to use export controls to target Chinese memory chip manufacture without specific military purposes, reflecting a broader understanding of American national security.
The action would also aim to defend the two only American memory chip manufacturers, Micron Technology Inc. and Western Digital Corp., who collectively account for about a quarter of the NAND chip industry.
NAND chips are used to store data in devices like smartphones, laptops, and data centres for companies like Amazon, Facebook, and Google. The number of NAND chips and their level of sophistication affect how many gigabytes of data a phone or laptop can store.
According to two of the sources, under the proposed move, American officials would prohibit the export to China of equipment needed to manufacture NAND chips with more than 128 layers. The main manufacturers of these instruments are Applied Materials and LAM Research Corp, both of which have their headquarters in Silicon Valley.
In all of the publications, it was stated that the administration was only beginning to consider the issue and had not yet created any suggested regulations.
A spokesman for the Commerce Department, which supervises export controls, was contacted to comment on the anticipated change. She declined to discuss potential limits but pointed out that “the Biden administration is focused on impairing (China’s) efforts to manufacture advanced semiconductors to address significant national security risks to the United States.”
Company on the rise
YMTC, which was established in 2016, is a growing force in the NAND chip industry. According to a study released by the White House in June 2021, YMTC’s low prices are putting pressure on Micron and Western Digital. According to that assessment, YMTC’s growth and affordable products pose “a direct challenge” to Micron and Western Digital. According to the article, YMTC is China’s “national champion” and has received almost $24 billion in subsidies from China.
According to a Bloomberg story, YMTC is in discussions with Apple Inc. to provide the leading U.S. smartphone manufacturer with flash memory chips. YMTC is already under investigation by the Commerce Department over whether it violated U.S. export regulations by supplying chips to the Chinese telecoms giant Huawei.
Micron, SK Hynix, and LAM Research Corp. declined to comment on American policies. Requests for comment from Western Digital Corp., Applied Materials Inc., YMTC, and Samsung did not receive an instant response.
Congress takes action
Under Biden’s predecessor Donald Trump, tense relations between China and the United States over the internet industry grew worse and have remained so ever since. According to Reuters, Biden’s administration is also thinking of placing limits on the importation of machinery used to produce advanced logic chips into China in an effort to put SMIC, the country’s largest chipmaker, under pressure.
Last week, the U.S. Congress passed measures that will help the country compete with China by pouring billions of dollars into local chip manufacturing.
The legislation would bar chipmakers who accept payments from setting up or increasing manufacturing for specific advanced chips, including sophisticated memory chips at a level to be decided by the administration, in nations like China.
Walt Coon of the consulting firm Yole Intelligence claims that YMTC produces nearly twice as many NAND flash memory chips as it did a year ago, or roughly 5% of the world’s total production. Approximately 13 percent belong to Western Digital, and 11 percent to Micron. According to Coon, restrictions like those that Biden’s administration is considering would be extremely detrimental to YMTC.
“If they were stuck at 128, I don’t know how they would really have a path forward,” Coon said.
According to Yole data, output of NAND chips in the United States has declined from 2.3 percent to 1.6 percent during the same period, while China’s manufacturing has increased from under 14 percent of the global total in 2019 to over 23 percent this year. Nearly majority of the chip production for American businesses is done abroad.
What effect the prospective restrictions may have on other players in China was not immediately evident. According to a press statement from Intel, the Chinese facility is already generating memory chips with 144 layers. Intel also has a contract to manage operations in the factory it is selling to SK Hynix in China.
