The last few weeks have seen a bevy of new stories surrounding YMTC, the Chinese chipmaker linked to the People’s Liberation Army, which Beijing dreams of turning into the most powerful memory chip company in the world.
Over the summer, China Tech Threat produced a report titled “Silicon Sellout: How Apple’s Partnership with Chinese Military Chip Maker YMTC Threatens American National Security.” An Apple-YMTC deal will create risk for American iPhone users, grow America’s dependence on Chinese chips, and give YMTC legitimacy in the eyes of the world’s memory chip buyers. Fortunately, last week Senator Tom Cotton of Arkansas and Representative Mike Gallagher of Wisconsin introduced “crippling sanctions” legislation which would “wall off YMTC from the U.S. economy and prevent Apple from moving forward with selecting YMTC memory chips.”
Other actions are brewing on the Hill, as well. As China Tech Threat has consistently argued, YMTC should be on the Commerce Department’s Entity List. To date, the Bureau of Industry and security has not levied any penalties on the company. That inaction has likely sparked legislators to hold the Commerce Department’s Bureau of Industry and Security accountable. As Export Compliance Daily has reported, Rep. Michael McCaul “will initiate a review of the Bureau of Industry and Security and its export control procedures” if Republicans win control of the House of Representatives this November.
Even more notably, bipartisan groups of senators have written a letter to the Director of National Intelligence and a letter to Secretary of Commerce Gina Raimondo urging them to take the threat of YMTC seriously, including an appeal for Raimondo to put YMTC on the Entity List. This week, China Tech Threat recognized that momentum and wrote a letter urging BIS to put YMTC on the Entity List.
There are indications that BIS is indeed readying measures targeting YMTC. The New York Times has reported that, “The administration is…expected to try to control the sale of cutting-edge U.S.-made tools to China’s domestic semiconductor industry.” The government is “considering…measures that could apply to the Chinese memory chip maker Yangtze Memory Technologies Company, or YMTC…” The appearance of this report builds on other recent pieces of reporting; a Reuters story in September, for example, stated that Commerce is preparing to “hit China with broader curbs on U.S. chip and tool exports” this month.
As for YMTC, there are indications that the company is hitting the panic button ahead of tough new penalties. Nikkei reports that the company’s CEO, Simon Yang, is stepping down for unknown reasons. Color us skeptical that a leader who has built the company to the point where it is capable of producing near-industry-leading 232-layer chips is walking away for something other than a major reason. It seems more likely that, if reports of coming restrictions on YMTC are to be believed, the company may be girding for battle against them with a personnel change. But given the opaque nature of most companies intertwined with the Chinese state, we may never know for sure.