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US-China tech war
TechTech War

Tech War: China’s top flash memory maker YMTC faces production disruptions from potential blacklisting

  • Wuhan-based YMTC is already on the US unverified list, but the Entity List could threaten mature production below 128-layer technology
  • Reports say the chip maker will be blacklisted along with dozens of other Chinese companies as the US seeks to further restrict China’s chip ambitions

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Yangtze Memory Technologies Co’s fourth-generation TLC 3D flash memory. Photo: Handout
Che Panin Beijing

China’s top flash memory chip maker Yangtze Memory Technologies Co (YMTC) could see its production hindered and technological progress capped if added to a US trade blacklist, according to analysts.

Despite the Wuhan-based company’s assurances that it will comply with US export rules, the US government is set to put the company on its Entity List, which would require suppliers to seek explicit approval before selling to YMTC. The US Department of Commerce has not announced its decision, but it is set to be added along with more than 30 other Chinese companies “as early as this week”, Bloomberg News reported.

This would be a heavy blow to YMTC, which is estimated to control 5 to 6 per cent of the global NAND flash memory market, according to a research note by asset management firm Bernstein. As the biggest player in China’s flash memory market, it was the most high-profile company in the latest batch of 31 Chinese entities that the US Bureau of Industry and Security (BIS) added to its Unverified List (UVL) on October 7.

The Entity List would introduce an even greater disruption of trade for YMTC, analysts said, because its scope “includes everything”. Current rules require tools capable of producing 128-layer NAND flash chips to be approved for export.

“Adding YMTC to the Entity List will not bring down its current production completely,” said G. Dan Hutcheson, vice-chair at TechInsights, a semiconductor research company. “But it will hinder production and product development due to restricted access to US suppliers.”

Dylan Patel, chief analyst at Los Angeles-based SemiAnalysis, said YMTC will still be able to produce for a while due to many spare tools,” but its technology will be capped at 128-layer.”

Industry-leading memory chips currently have more than 200 layers. YMTC declined to comment.

A US move to punish YMTC and other entities on the UVL could also suggest that Washington’s desire to restrict China’s chip industry is strong enough to overrule technical cooperation among individual businesses.

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