Washington's Chip Controls on China Impact Yangtze Memory Technologies Corp
YMTC Plans to Procure Equipment from East Asian Providers
Overt Operator
November 03, 2023
In a significant development, Washington's chip controls on China are making a profound impact as Yangtze Memory Technologies Corp. (YMTC), the country's largest memory chip maker, faces the need to raise "billions of dollars" in new capital. The company has reportedly burned through $7 billion over the past year, as reported by the Financial Times.
YMTC was added to Washington's trade blacklist last December, which prohibits the company from procuring U.S. equipment to manufacture its chips. The exact amount YMTC needs to raise remains undisclosed, but FT reports it to be "equivalent to billions of dollars".
YMTC, based in Wuhan, plays a crucial role in China's ambition for semiconductor self-sufficiency. However, since last fall, U.S. restrictions have limited the company's access to advanced chip technology. Despite a $7 billion capital boost from backers like China's "Big Fund" last year, YMTC has rapidly expended funds on equipment and new components, leading to the need for a new fundraising round.
Surprisingly, YMTC has seen strong domestic investor interest even before tighter U.S. export controls. This shows a domestic show of unity against U.S. limitations, indicating that Chinese companies are coming together to cope with the challenges of U.S. pressure, according to a government official close to the company.
According to one investor, YMTC is determined to find ways to continue its operations. The investor stated, "If Chinese companies have equipment that can be used, [YMTC] will use it. If not, it will see if countries other than the US can sell to it. If that doesn't work, YMTC will develop it together with the supplier."
To mitigate the impact of U.S. restrictions, YMTC plans to procure equipment from Chinese suppliers and also explore options with Japanese, South Korean, and European vendors. The company's collaboration with Chinese firms Naura and AMEC to enhance etching technology, a key aspect of chip manufacturing, reflects its determination to overcome the challenges it faces.
The situation with YMTC highlights the far-reaching consequences of Washington's chip controls on China. As the nation's largest memory chip maker struggles to raise funds and navigate around U.S. limitations, it is clear that the impact of these restrictions extends beyond individual companies. The ability of Chinese firms to come together and explore alternative solutions demonstrates their resilience and determination to maintain their position in the semiconductor industry.
It remains to be seen how YMTC will fare in its fundraising efforts and how the ongoing tensions between the U.S. and China will shape the future of the global chip market.
Nonetheless, the developments surrounding YMTC serve as a reminder of the complex dynamics at play in the technology sector and the significant role that geopolitics can play in shaping the industry's landscape.