Will YMTC get added to the Entity List?
BIS’s New Export Controls
On October 7, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) issued new export controls targeting Chinese chipmakers. In addition, BIS added 31 Chinese entities – including YMTC – to its Unverified List (UVL), what seems to be a precursor before being placed to the Entity List.
The new export control rules are having an immediate impact. It has been reported that American semiconductor manufacturing equipment companies such as KLA Corp, Applied Materials, and Lam Research are hitting pause on their operations in China and pulling out their staff based at YMTC as well as Dutch semiconductor company, ASML.
China Tech Threat released a memo on key areas that policymakers, analysts, and media should follow as BIS implements these new export controls targeting China. The 60-day window ending December 6 will be critical.
5 Key Issue Areas to Monitor:
2. Transferring Companies on the UVL to the Entity List
The Commerce Department is making it clear that the UVL is an on-ramp to the Entity List. The pathway is clear; what really matters is whether the Commerce Department will work on the appropriate timeline and take the necessary enforcement action to make it happen.
3. Congressional Oversight
While Congress has no formal role in the issuance or enforcement of the rules, multiple Democrat and Republican members of Congress have spent the last two years demanding that the Commerce Department add YMTC to the Entity List, reflecting a concern that the Department actually do what it is empowered to do.
4. U.S. Citizens Supporting Chinese Chip Production
Americans can’t work at a Chinese semiconductor facility inside China without permission. This could potentially govern hundreds, if not thousands of American engineers and other support staff working inside China. KLA Corp, Applied Materials, and Lam Research are hitting pause on their operations in China and pulling out their staff based at YMTC. YMTC has asked its core U.S. staff to leave. In addition, ASML, the Dutch semiconductor company, issued a similar message its U.S. staff as well.
5. Review of License Applications
It’s worth tracking whether BIS follows through in becoming more aggressive in denying licenses for the export of items used for semiconductor fabrication. Some of the license requirements helpfully institute a “presumption of denial” policy for items bound for any semiconductor fabrication facility owned by the People’s Republic of China producing certain logic, DRAM, and NAND flash memory chips.
Roslyn’s Statement after the BIS Countdown Expired: Is Commerce Getting Played by the Chinese Government on Export Controls?
“Being added to the unverified list used to be a nuisance. Now it should be terrifying.”
–Gregory Allen, CSIS
“The chances of YMTC being added to the “entity list” at 99 per cent.”
–Kit Conklin, Atlantic Council
“These restrictions on the transfer of advanced U.S. manufacturing technology are absolutely necessary, but there is still much more that needs to be done to stop the Chinese Communist Party from cheating and stealing its way to technological dominance… I continue to urge the Biden administration to act swiftly on other export control actions and to add YMTC to the Entity List to protect America’s technology supply chains and American consumers.”
–Senate Majority Leader Chuck Schumer
“I see these export controls as being hugely consequential. It goes straight to the heart of Beijing’s efforts to create a domestic world class semiconductor industry.”
–Martijn Rasser, CNAS
“The US government’s new export controls are wreaking havoc on China’s chip industry. New rules around “US persons” are driving an “industry-wide decapitation.”
-Jordan Schneider, Rhodium Group
GOP Foreign Affairs Committee: McCaul Oversight Request Examines Effectiveness of New BIS Rules in Protecting Critical Technology From CCP
The Washington Post: Western suppliers cut ties with Chinese chipmakers as U.S. curbs bite
Wall Street Journal: American Executives in Limbo at Chinese Chip Companies After U.S. Ban
Financial Times: China’s YMTC asks core US staff to leave due to chip export controls
South China Morning Post: China’s top memory chip maker woos local graduates for design jobs as US tightens export controls
The Telegraph: Xi is turning China into a hermit kingdom abandoned by tech
If you want to learn more about how these recent events have unfolded, please visit our Apple-YMTC page.