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WASHINGTON, Aug 1 (Reuters) – The USA is contemplating limiting shipments of American chipmaking tools to reminiscence chip makers in China together with Yangtze Reminiscence Applied sciences Co Ltd (YMTC), based on 4 folks acquainted with the matter, a part of a bid to halt China’s semiconductor sector advances and defend U.S. corporations.
If President Joe Biden’s administration proceeds with the transfer, it might additionally harm South Korean reminiscence chip juggernauts Samsung Electronics Co Ltd (005930.KS) and SK Hynix Inc (000660.KS), the sources mentioned, talking on situation of anonymity. Samsung has two massive factories in China whereas SK Hynix Inc is shopping for Intel Corp’s (INTC.O) NAND flash reminiscence chips manufacturing enterprise in China.
The crackdown, if accredited, would contain barring the cargo of U.S. chipmaking tools to factories in China that manufacture superior NAND chips.
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It might mark the primary U.S. bid by export controls to focus on Chinese language manufacturing of reminiscence chips with out specialised navy purposes, representing a extra expansive view of American nationwide safety, based on export management consultants.
The transfer additionally would search to guard the one U.S. reminiscence chip producers, Western Digital Corp (WDC.O) and Micron Expertise Inc (MU.O), which collectively symbolize a couple of quarter of the NAND chips market.
NAND chips retailer information in units reminiscent of smartphones and private computer systems and at information facilities for the likes of Amazon (AMZN.O), Fb and Google (GOOGL.O). What number of gigabytes of knowledge a telephone or laptop computer can maintain is decided by what number of NAND chips it consists of and the way superior they’re.
Underneath the motion being thought of, U.S. officers would ban the export of instruments to China used to make NAND chips with greater than 128 layers, based on two of the sources. LAM Analysis Corp (LRCX.O) and Utilized Supplies (AMAT.O), each based mostly in Silicon Valley, are the first suppliers of such instruments.
All of the sources described the administration’s consideration of the matter as within the early levels, with no proposed laws but drafted.
Requested to touch upon the attainable transfer, a spokesperson for the Commerce Division, which oversees export controls, didn’t focus on potential restrictions however famous that “the Biden administration is concentrated on impairing (China’s) efforts to fabricate superior semiconductors to deal with vital nationwide safety dangers to the US.”
FAST-GROWING COMPANY
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 Home wrote in a June 2021 report. YMTC’s growth and low-price choices current “a direct menace” to Micron and Western Digital, that report mentioned. The report described YMTC as China’s “nationwide champion” and the recipient of some $24 billion in Chinese language subsidies.
YMTC, already underneath investigation by the Commerce Division over whether or not it violated U.S. export controls by promoting chips to Chinese language telecoms firm Huawei, is in talks with Apple Inc (AAPL.O) to produce the highest U.S. smartphone maker with flash reminiscence chips, based on a Bloomberg report.
LAM Analysis Corp, SK Hynix and Micron declined touch upon the U.S. coverage. Samsung, Utilized Supplies Inc, YMTC and Western Digital Corp didn’t instantly reply to requests for remark.
CONGRESS ACTS
Tensions between China and the US 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, in search of to hamstring China’s largest chipmaker, SMIC (0981.HK). read more
The U.S. Congress final week accredited laws aimed toward serving to the US compete with China by investing billions of {dollars} in home chip manufacturing. read more
Chipmakers that take cash underneath the measure can 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. read more
In keeping with Walt Coon of the consulting agency Yole Intelligence, YMTC accounts for about 5% of worldwide NAND flash reminiscence chip manufacturing, nearly double from a yr in the past. Western Digital stands at about 13% and Micron 11%. Coon mentioned YMTC can be enormously harm by restrictions like people who Biden’s administration is considering.
“In the event that they had been caught at 128, I do not understand how they might actually have a path ahead,” Coon mentioned.
Manufacturing of NAND chips in China has grown to greater than 23% of the worldwide whole this yr from underneath 14% in 2019, whereas manufacturing in the US has decreased from 2.3% to 1.6% over the identical interval, Yole information confirmed. For the American corporations, practically all of their chip manufacturing is finished abroad.
It was unclear what impression 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 language website, based on an Intel press launch.
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Reporting by Alexandra Alper and Karen Freifeld; Extra reporting by Stephen Nellis; Modifying by Chris Sanders and Will Dunham
Our Requirements: The Thomson Reuters Trust Principles.
