US to Blacklist YMTC and Several Chinese Companies Restricting Access to American Equipment

The Chinese 3D NAND producer YMTC, along with several other high-tech companies from the People’s Republic, will reportedly be added to the Department of Commerce’s “Entity List” this week, according to a report by DigiTimes. Corporations on the Entity List won’t be allowed to buy technology from American companies unless those companies have a special export authorization from the DoC (Department of Commerce).

As a producer of 3D NAND, YMTC has already encountered issues brought on by the broad restrictions imposed by the U.S. government against the Chinese semiconductor industry. The American wafer fab equipment (WFE) needed to produce 3D NAND with 128 or more layers is already unavailable to YMTC. Consequently, four major American manufacturers of chipmaking equipment have already ceased doing business with YMTC since they are required to get the necessary export permits from the Department of Commerce.

As a result of being added to the Entity List, YMTC will no longer have access to any software, technology, or other equipment used in wafer fabs produced in the United States or that incorporates American intellectual property. Early in October, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) added Yangtze Memory Technologies Company and 30 other organizations to the Unverified List (UVL) because it was unable to identify the end users of their products or whether those end users were involved in enhancing China’s military capabilities.

Once a business is listed on the UVL, it has 60 days to demonstrate that its goods do not contravene any export laws. This often implies that the company must consent to inspections and verifications by the US DoC. The company is subsequently added to the Entity List if the checks cannot be successfully performed to the satisfaction of the U.S. DoC. 

Being included in The Entity List, which functions as a blacklist, is significant since it prevents YMTC from using any American technology governed by laws. The same challenges that Huawei has confronted will also be faced by 30 other Chinese businesses, including YMTC. It is still being determined at this point if all of them will be able to thrive without access to American technology.