United States Adds China’s YMTC, Others To Trade Blacklist

The United States continues to restrict Chinese access to US technology, after it implemented fresh trade restrictions against mostly Chinese entities.

The US Commerce Department’s Bureau of Industry and Security (BIS) announced on Thursday  that Chinese memory chipmaker Yangtze Memory Technologies Co (YMTC), that has been in US sights for some time now, along with 21 “major” Chinese players in the artificial intelligence chip sector, have been added to a trade blacklist.

In all, BIS said that a total of 36 firms have been added the US Entity List for supporting the People’s Republic of China’s military modernisation, violations of human rights, and risk of diversion (to other banned entities).

Entity list

The US BIS has also released two new rules.

The first rule added the 36 entities to the Entity List which applies stringent license requirements that will severely restrict these entities’ access to advanced commodities, software, and technologies, is mainly focuses on AI technologies.

Nearly all firms are Chinese, except for one Chinese subsidiary located in Japan.

BIS said that its second rule removes entities from the Unverified List (UVL) due to satisfactory completion of End-Use Checks (EUCs) and verification of those entities’ bona fides, including in co-operation with the PRC (People’s Republic of China) government.

BIS said that a net total of 25 Chinese parties are being removed from its restricted party lists. The second rule also adds 9 Russian parties to the Entity List due to the inability to complete EUCs.

What all this means is that YMTC now finds itself in the same position as the likes of Huawei Technologies Co Ltd and Hikvision, and the new listing will ban YMTC’s suppliers from shipping US goods to it without a license, which will be almost impossible to obtain.

The 21 Chinese AI chip entities being added to the trade blacklist, which include Cambricon Technologies Corp and CETC.

These firms face an even tougher penalty, with the BIS effectively blocking their access to technology made anywhere in the world with US equipment.

“Today we are building on the actions we took in October to protect US national security by severely restricting the PRC’s ability to leverage artificial intelligence, advanced computing, and other powerful, commercially available technologies for military modernisation and human rights abuses,” said Under Secretary of Commerce for Industry and Security Alan Estevez.

“This work will continue, as will our efforts to detect and disrupt Russia’s efforts to obtain necessary items and technologies and other items for its brutal war against Ukraine, including from Iran,” said Estevez.

Expected move

In October Apple suspended its plans use memory chips from YMTC, after the plans to use its chips were leaked in September in South Korea media outlets, prompting warnings from US lawmakers.

YMTC’s 128-layer 3D NAND flash memory chips had reportedly already completed the months-long verification process for Apple to use the tech in iPhones.

However Senate intelligence committee vice-chair Marco Rubio was quoted by the Financial Times as saying that Apple would face scrutiny “like it has never seen from the federal government” if it used YMTC memory chips, which he said posed “security risks”.

Back in October, the US had placed YMTC and 30 other Chinese organisations on its “unverified list” of companies its officials are unable to inspect. This triggered immediate trade sanctions and paved the way for more serious consequences down the road.

Companies are added to the unverified list if the United States cannot complete on-site visits to determine whether they can be trusted to receive sensitive US technology exports, inspections, which in China require approval from the commerce ministry.

That move was part of sweeping measures from the US, aimed at barring China from developing advanced chip manufacturing capabilities and modernising its military.

Now these organisations have been officially added to the US entity list.

Coercion and bullying

The Chinese Embassy in Washington told Reuters the United States was engaging in “blatant economic coercion and bullying in the field of technology,” undermining normal business activities between Chinese and American companies and threatening the stability of global supply chains.

“China will resolutely safeguard the lawful rights and interests of Chinese companies and institutions,” it added.

But the Biden move was welcomed by Top Senate Democrat Chuck Schumer.

“YMTC poses an immediate threat to our national security, so the Biden Administration needed to act swiftly to prevent YMTC from gaining even an inch of a military or economic advantage,” Schumer was quoted as saying in a statement.