Last December, James Mulvenon of SOS International released a report that explored Chinese state-owned memory chip maker Yangtze Memory Technologies Company’s (YMTC) ties to the Chinese Communist Party (CCP) and People’s Liberation Army (PLA). The report identified alarming uses of state subsidies to support espionage and anticompetitive practices against competitors.
The December report came weeks after Dr. Roslyn Layton cautioned in Forbes that, given ties to the PLA, YMTC and other Chinese state-owned chip makers “must be added to the Entity List [or at least designated as a Military End User] to ensure critical US technology is not weaponized against Americans.”
In February, Dr. Mulvenon, who is rumored to be a front-runner to lead the U.S. Commerce Department’s Bureau of Industry and Security (BIS), updated his report, further detailing YMTC’s ties to the Chinese military.
YMTC’s parent company, Tsinghua Holdings, oversees a vast network of subsidiaries, including tech makers that supply the PLA. “These military ties have led previous acquisition bids for American companies by Tsinghua Unigroup, YMTC’s direct parent, to be correctly blocked for national security concerns,” the report states.
Tsinghua Tongfang, another subsidiary of Tsinghua Holdings, provides military-end use products to the PLA, including wireless communications, satellite navigation and electronic countermeasure equipment, among other goods. The company has a Military Information Security Product certification, which is required for companies that support the PLA. These sales generate over $9 million USD annually.
Leaders within Tsinghua Tongfang also have personal military ties, Mulvenon notes. Zhao Xiaoyan, general manager of Tongfang Time Link, is a former member of the PLA and a graduate of the PLA Information Engineering University, the training academy for Chinese military’s technical intelligence organization. Yang Zhiming, manager of the military business arm, was a former leader at two Chinese military factories.
What’s more, Tsinghua Holdings is funded and controlled by Tsinghua University. Defense and military capabilities are key focuses of the University’s research portfolio. At least one laboratory at Tsinghua University has been approved by the state as a key national defense discipline lab. Several other labs are dedicated to advanced military technology development.
Mulvenon’s report lays bare YMTC’s alignment with the Chinese military, even while it pretends to be an independent, commercial actor. Further, it underscores the importance that BIS designate YMTC and other Chinese state-owned technology makers at least as Military End Users. This is necessary to stop the flow of proliferation of sensitive US technologies into adversarial hands—a point CTT highlighted last year in our policy review report on semiconductor manufacturing equipment.