CTT Letter: Bipartisan Momentum to Tackle YMTC Gains Steam

On Tuesday, China Tech Threat sent a letter to the Department of Commerce’s Under Secretary for the Bureau of Industry and Security (BIS), Alan Estevez, urging him to place YMTC on the Entity List. China Tech Threat and others have made this call before, but we suspect growing bipartisan support will help force a more serious look at YMTC and the threat it poses to our national and economic security. To quote the letter:

Bipartisan momentum to stop Chinese chip manufacturer YMTC is accelerating. In September, Senators John Cornyn, Marco Rubio, Charles Schumer, and Mark Warner sent a letter to Director of Intelligence Avril Haines warning about the dangers of YMTC and its impending partnership with Apple…which has been assiduously detailed in China Tech Threat’s report, “How Apple’s Partnership with Chinese Military Chipmaker YMTC Threatens National Security.” 

The same signatories to that letter also joined Sens. Mike Crapo, Bill Hagerty, and James Risch in another bipartisan letter from August characterizing YMTC as an “immediate threat” and urging the Commerce Department to place YMTC on the Entity List.

Senator Warner has also told the Financial Times, “It has been clear for some time now that YMTC is a bad actor — and a key part of the Chinese Communist Party’s goal of shifting control of global microelectronics to the PRC [People’s Republic of China]. “It’s long past time to act.”

It is likely this bipartisan momentum is building even within the Commerce Department. Will Hunt, who was previously an analyst with Georgetown University’s Center for Security and Emerging Technologies and is now a Special Advisor at the Department of Commerce, has advocated for unilateral controls on YMTC.

YMTC is dangerous because of its connections to the Chinese military and the Chinese government’s intent to build it into a national champion that will put other memory chip makers out of business. China has spent approximately $24 billion in subsidies to allow YMTC to gain market share by undercutting other competitors on price. A deal with Apple to put YMTC chips in iPhones could have disastrous long term effects, as the letter makes clear:

“By locking in a partnership with Apple, [the Chinese government] has moved closer to achieving its objective of forcing companies to turn to China as their prime source for advanced technologies. YMTC has now secured a partnership with one of the world’s true flagship technology companies, signaling its credibility as a supplier to other firms.”

As the China Tech Threat letter points out, YMTC is also dangerous in its apparent support for Chinese companies such as Huawei and Hikvision.

In September 2022, the Financial Times reported the existence of a report by IP Research Group that showed YMTC has provided NAND memory chips for Huawei’s Mate Xs 2 smartphone – a potential violation of the Foreign Direct Product Rule. In another display of bipartisan commitment to tackling YMTC, Senate Majority Leader Charles Schumer commented, “This report is extremely troubling and further underscores the need for the administration to act swiftly to add YMTC to the entity list.

The existence of a partnership between YMTC and Chinese surveillance giant Hikvision is also concerning  — YMTC may be supporting human rights violations. A Chinese website called HikSemi reported in December 2021 that the SSD V300 “adopts the advanced domestic main control and the Yangtze River storage particles.” At a minimum, this evidence deserves more evaluation to see if YMTC is complicit in human rights violations. 

National security practitioners should be encouraged by the growing bipartisan momentum to stop a major threat in its tracks. Even more than that, policymakers inside BIS and the rest of the federal government should heed a clear emerging consensus and see that a company poised to compromise American jobs and security through control of the memory chip market belongs on the Entity List.