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US Considers Crackdown on Chinese Memory Chip Makers

WASHINGTON (Reuters) – The United States is considering restricting shipments of U.S. chip-making equipment to Chinese memory chip makers such as Yangtze River Memory Technologies (YMTC), four people familiar with the matter said. China’s semiconductor sector moves forward, protecting US companies.

South Korean memory chip giants Samsung Electronics (005930.KS) and SK Hynix (000660.KS) could also be hit if the Joe Biden administration goes ahead with the move, the sources said, asking not to be identified. told to Samsung has two of his large factories in China, and SK Hynix Inc has acquired Intel Corp.’s (INTC.O) NAND flash memory chip manufacturing business in China.

The crackdown, if approved, would include banning the shipment of US chip-making equipment to Chinese factories that make advanced NAND chips.

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This would be the first bid by the United States to target Chinese memory chip production through export controls and not have specific military uses, according to export control experts.

The move also seeks to protect Western Digital (WDC.O) and Micron Technology (MU.O), the only U.S. memory chip makers that account for about a quarter of the NAND chip market.

NAND chips store data in devices like smartphones and personal computers, as well as in data centers like Amazon (AMZN.O), Facebook and Google (GOOGL.O). The number of gigabytes of data a mobile phone or laptop can hold is determined by the number of NAND chips it has and its sophistication.

Under the measures under consideration, US officials will ban exports to China of tools used to make NAND chips with more than 128 layers, two sources said. Silicon Valley-based LAM Research Corp (LRCX.O) and Applied Materials (AMAT.O) are major suppliers of such tools.

All sources explain that the administration’s consideration of the issue is in its early stages and the proposed regulations have not yet been drafted.

Asked for comment on the possible move, a spokeswoman for the Department of Commerce, which oversees export controls, did not discuss potential restrictions, but said, “The Biden administration poses significant national security risks. To deal with it, it is focused on undermining (China’s) efforts to manufacture advanced semiconductors to America.”

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In this illustration photo taken on February 25, 2022, memory chips from Korean semiconductor supplier SK Hynix are mounted on a computer circuit board. REUTERS/Florence Lo/Illustration/File Photo

Founded in 2016, YMTC is gaining traction in NAND chip manufacturing. As the White House wrote in his June 2021 report, Micron and Western Digital are under pressure from his YMTC’s low price. YMTC’s expansion and low-price offering poses a “direct threat” to Micron and Western Digital, the report said. The report describes the YMTC as China’s “national champion” and receiving about $24 billion in subsidies from China.

YMTC has already been investigated by the Commerce Department for whether it violated U.S. export controls by selling chips to Chinese telecom company Huawei, Bloomberg reports.

LAM Research Corp, SK Hynix and Micron declined to comment on US policy. Samsung, Applied Materials Inc, YMTC, and Western Digital Corp did not immediately respond to requests for comment.

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Under Mr. Biden’s predecessor, Donald Trump, tensions between China and the United States over the tech sector deepened and have continued ever since. Reuters reported on July 8 that the Biden administration would limit the shipment of tools to China for making advanced logic chips in an attempt to undermine China’s largest semiconductor maker, SMIC (0981.HK). are also reported to be under more

Congress last week approved a law aimed at helping the United States compete with China by investing billions in domestic chip more

Chip makers receiving money under the measure would be barred from building or expanding manufacturing of certain advanced chips, including government-determined levels of advanced memory chips, in countries including more

According to Walt Coon of consulting firm Yole Intelligence, YMTC accounts for about 5% of global NAND flash memory chip production, almost double what it was a year ago. Western Digital is about 13% and Micron is 11%. Kuhn said the YMTC would be hit hard by restrictions such as those being considered by the Biden administration.

“If they get stuck at 128, I don’t know how they’ll really move forward,” Kuhn said.

NAND chip production in China has grown from less than 14% in 2019 to more than 23% of the global total this year, while production in the US jumped from 2.3% to 1.6% over the same period, according to Yole data. Decreased. For US companies, almost all chip production is done overseas.

It was unclear how the potential restrictions would affect other players in China. Intel has a contract to manage operations at the factory it sells to China’s SK Hynix, and according to Intel’s press release, the Chinese site he’s already producing his chips with 144 layers of memory. increase.

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Reported by Alexandra Alper and Karen Freifeld. Additional reporting by Stephen Nellis.Editing by Chris Sanders and Will Dunham

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