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US Said to Consider Crackdown on Chinese Memory Chip Manufacturers: Details

The United States is contemplating limiting shipments of American chipmaking gear to reminiscence chip makers in China together with Yangtze Memory Technologies Company Limited (YMTC), in accordance to 4 folks aware of the matter, a part of a bid to halt China’s semiconductor sector advances and shield US firms.

If President Joe Biden’s administration proceeds with the transfer, it may additionally harm South Korean reminiscence chip juggernauts Samsung Electronics and SK Hynix, the sources stated, talking on situation of anonymity. Samsung has two massive factories in China whereas SK Hynix is shopping for Intel’s NAND flash reminiscence chips manufacturing enterprise in China.

The crackdown, if accredited, would contain barring the cargo of US chipmaking gear to factories in China that manufacture superior NAND chips.

It would mark the primary US bid by way of export controls to goal Chinese manufacturing of reminiscence chips with out specialised navy purposes, representing a extra expansive view of American nationwide safety, in accordance to export management consultants.

The transfer additionally would search to shield the one US reminiscence chip producers, Western Digital and Micron Technology, which collectively symbolize a couple of quarter of the NAND chips market.

NAND chips retailer knowledge in gadgets reminiscent of smartphones and private computer systems and at knowledge centres for the likes of Amazon, Facebook and Google. How many gigabytes of knowledge a cellphone or laptop computer can maintain is set by what number of NAND chips it contains and the way superior they’re.

Under the motion being thought of, US officers would ban the export of instruments to China used to make NAND chips with greater than 128 layers, in accordance to two of the sources. LAM Research Corp and Applied Materials, each based mostly in Silicon Valley, are the first suppliers of such instruments.

All the sources described the administration’s consideration of the matter as within the early levels, with no proposed rules but drafted.

Asked to remark on the potential transfer, a spokesperson for the Commerce Department, which oversees export controls, didn’t focus on potential restrictions however famous that “the Biden administration is focused on impairing (China’s) efforts to manufacture advanced semiconductors to address significant national security risks to the United States.”

Fast-growing firm

YMTC, based in 2016, is a rising energy in manufacturing NAND chips. Micron and Western Digital are underneath stress from YMTC’s low costs, because the White House wrote in a June 2021 report. YMTC’s enlargement and low-price choices current “a direct threat” to Micron and Western Digital, that report stated. The report described YMTC as China’s “national champion” and the recipient of some $24 billion in Chinese subsidies.

YMTC, already underneath investigation by the Commerce Department over whether or not it violated US export controls by promoting chips to Chinese telecoms firm Huawei, is in talks with Apple Inc to provide the highest US smartphone maker with flash reminiscence chips, in accordance to a Bloomberg report.

LAM Research Corp, SK Hynix and Micron declined remark on the US coverage. Samsung, Applied Materials Inc, YMTC and Western Digital Corp didn’t instantly reply to requests for remark.

Congress acts

Tensions between China and the United States over the tech sector deepened underneath Biden’s predecessor Donald Trump and have continued since. Reuters reported on July 8 that Biden’s administration can also be contemplating restrictions on shipments to China of instruments to make superior logic chips, searching for to hamstring China’s largest chipmaker, SMIC.

The US Congress final week accredited laws geared toward serving to the United States compete with China by investing billions of {dollars} in home chip manufacturing.

Chipmakers that take cash underneath the measure could be prohibited from constructing or increasing manufacturing for sure superior chips, together with superior reminiscence chips at a degree to be decided by the administration, in international locations together with China.

According to Walt Coon of the consulting agency Yole Intelligence, YMTC accounts for about 5 % of worldwide NAND flash reminiscence chip manufacturing, virtually double from a yr in the past. Western Digital stands at about 13 % and Micron 11 %. Coon stated YMTC could be significantly harm by restrictions like people who Biden’s administration is considering.

“If they were stuck at 128, I don’t know how they would really have a path forward,” Coon stated.

Production of NAND chips in China has grown to greater than 23 % of the worldwide whole this yr from underneath 14 % in 2019, whereas manufacturing within the United States has decreased from 2.3 % to 1.6 % over the identical interval, Yole knowledge confirmed. For American firms, practically all of their chip manufacturing is completed abroad.

It was unclear what influence the potential restrictions might need on different gamers in China. Intel, which retains a contract to handle operations within the manufacturing facility it’s promoting to SK Hynix in China, is already producing reminiscence chips with 144 layers on the Chinese website, in accordance to an Intel press launch.

© Thomson Reuters 2022

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