In the last post, we outlined the role that semiconductor manufacturing equipment companies have played in the semiconductor supply chain in the US and China. SME companies are critical because they can be a key linkage in slowing down the rise of China’s semiconductor industry. Moreover, some SME companies in China also have ties to the Chinese military. Our last post focused on the role of a company that have received significant attention of late: Semiconductor Manufacturing International Corporation. Today we will focus on two lesser-known companies: Yangtze Memory Technologies Company (YMTC) and ChangXin Memory Technologies (CXMT).
First, YMTC. As Roslyn Layton explain in her recent study:
YMTC is owned by Tsinghua Unigroup, which also controls Tsinghua University, one of China’s most esteemed and celebrated universities, and a long-time collaborator with the PLA and the Chinese Academy of Sciences. Tsinghua Unigroup tried to purchase semiconductor manufacturers but was blocked by CFIUS. Tsinghua University has 9 defense laboratories. Like Huawei in telecom equipment, Lenovo in laptops, Inspur in servers, and Baidu, Tencent, and Alibaba, Semiconductor Manufacturing International Corporation (SMIC) is the national champion for semiconductors.
Secondly, CXMT. From the study:
CXMT was created as a “pilot demonstration” of the Made in China 2025 initiative, enjoys tremendous support from a variety of Chinese government programs, and features multiple business leaders also serving in important Communist Party roles. With these many advantages, CXMT has “emerged as China’s first and only DRAM maker” with chips measuring 19nm and 17nm products in the pipeline. CXMT’s challenges, according to an industry researcher, are “potentially violating numerous patents… [and] the inability to invest in and transition to new equipment for next-gen process technologies…” In other words, CXMT will likely need to steal IP and buy manufacturing equipment. Despite these problems, the company “is expected to support about half of the global [dynamic random-access memory] DRAM demand” – an incredible leap given its 4-year existence.
With links to Chinese defense interests as well as Huaweii, YMTC and CXMT are threats to US national security interests. It should be included in recent actions taken against SMIC and added to consideration for a designation on the Entity List.