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China’s ambitious semiconductor self-sufficiency drive is facing greater difficulty after Washington expanded the scope of US tech export controls targeted at chip makers on the mainland. Illustration: Shutterstock
TechTech War

ExclusiveTech war: US officials said to start talks with Chinese chip equipment maker Naura Technology Group over new export restrictions

  • US trade officials from the American embassy in Beijing initiated talks with Naura executives at the firm’s headquarters in the nation’s capital
  • The meeting was held weeks after a subsidiary of the company was added to Washington’s trade watch list
US-China tech war
Che Pan
Che Panin Beijing
Why you can trust SCMP
United States government officials have initiated talks with China’s leading supplier of semiconductor manufacturing equipment about Washington’s latest hi-tech export restrictions, according to a person with knowledge of the matter.

US trade officials from the American embassy in Beijing held talks with executives of Naura Technology Group last week at the Chinese company’s headquarters in the nation’s capital, according to the person, who declined to be named because the discussions were private.

The meeting came weeks after a Naura subsidiary, Beijing Naura Magnetoelectric Technology, was among 31 Chinese tech firms, research institutions and related entities added by Washington to the US Unverified List (UVL).
Parties whose bona fides have not been substantiated by the Bureau of Industry and Security (BIS), an agency under the US Department of Commerce, are put on this list, which serves as a trade restriction since those on it are ineligible to receive items subject to the US government’s Export Administration Regulations.
Under updated rules announced by the BIS on October 7, parties on the UVL that fail to provide required data for the agency’s verification process may be added to the US trade blacklist, formally known as the Entity List.
The facade of Naura Technology Group’s headquarters in Beijing. Photo: Handout

Naura on Monday declined to comment about having a meeting with US officials.

In an earlier corporate filing to the Shenzhen Stock Exchange, Naura downplayed its subsidiary’s inclusion in the UVL by indicating that this business accounted for only 0.5 per cent of the group’s total revenue in 2021. Naura’s shares closed up 1.25 per cent to 265.90 yuan (US$36.70) on Monday.

The US embassy in Beijing did not immediately reply to a request for comment on Monday.

BIS export control officers form part of the US commercial services group stationed at the embassy, according to the website of the US Commerce Department’s International Trade Administration. Phone calls made to the listed telephone numbers were not answered.

The meeting with Naura, if confirmed, would represent the latest signal that Chinese semiconductor companies are willing to comply with the latest US rules to avoid harsh trade restrictions, which could lead to unwanted disruptions or potentially cause their business to go under.

The Bureau of Industry and Security, an agency under the US Department of Commerce, has implemented updates that further restrict China’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. Photo: Shutterstock
Compliance with the BIS verification process has previously helped a number of mainland firms to be removed from the US trade watch list. In a statement earlier this month, WuXi Biologics said its subsidiary in eastern Jiangsu province was removed from the UVL after the US Commerce Department’s on-site visits to the firm’s end users.
Naura recently asked its American employees in China to immediately stop working on research and development projects, according to an earlier report by the South China Morning Post, which cited an unnamed source briefed on the company’s decision.

That move followed the BIS’ notice on restricting the “ability of US persons to support the development or production” of chips at certain China-located semiconductor fabrication facilities without a licence.

Yangtze Memory Technologies Co (YMTC), China’s top memory chip maker and one of those recently added to the UVL by Washington, last week released a statement that highlighted its willingness to comply with regulations around the world.

Tighter US export controls imperil China’s semiconductor self-sufficiency drive

“YMTC is a commercial entity that follows global, market-based and compliant concepts,” the company said. “We’ve always adhered to the principle of legal and compliant operation across the globe since [our] establishment.”

Still, Apple was reported last week to have suspended plans to use memory chips made by YMTC after the Chinese firm was added to the US government’s UVL.
ASML Holding and Lam Research Corp, among the world’s top chip-making tool providers, have also scrambled to comply with the latest US trade restrictions on China by pulling American engineers out of their operations on the mainland.

Last week, Lam Research president and chief executive Timothy Archer said the company has “taken the necessary steps to ensure full compliance with the rules, and ceased shipments and support as required”.

The company estimated that the US trade restrictions could reduce its 2023 revenue by up to US$2.5 billion.
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