US administration considers sanctions that would block manufacturing of advanced NAND flash memory chips in China amidst competitive threat to US firms
The US administration is reportedly considering blocking shipments of certain types of advanced chipmaking equipment to China in a move aimed at hobbling the expansion of memory chip makers operating in the country.
The move is intended to limit the expansion of companies including Yangtze Memory Technologies Co (YMTC), which has been making rapid advances in the market for NAND flash memory chips, but would also affect companies such as Samsung Electronics and SK Hynix that operate factories in China, Reuters reported, citing unnamed people familiar with the matter.
Samsung operates two large factories in China, while SK Hynix is purchasing Intel’s NAND flash memory chip business in China.
The US move being considered would block the shipment of US chipmaking equipment to factories in China that make NAND flash with more than 128 layers, according to the report.
That would effectively place a cap on how far Chinese companies such as YMTC could advance in NAND flash manufacturing technology.
But it would also be likely to affect Chinese factories operated by firms from outside of China.
Intel, for instance, retains a contract to manage operations in the Chinese factory it is selling to SK Hynix, and has said it is already producing memory chips with 144 layers at the site.
The US launched into trade hostilities with China over the country’s rapidly advancing tech industry under former president Donald Trump, notably initiating wide-ranging sanctions against telecommunications equipment and smartphone maker Huawei, and this has continued under the current administration.
The measure being considered would broaden those efforts by targeting the entirety of the NAND flash industry in China, rather than any specific company.
In a June 2021 report the US administration wrote that YMTC’s low prices and rapid expansion represented a “direct threat” to US memory chip makers Micron and Western Digital.
Over the past year YMTC has nearly doubled its share of the worldwide NAND flash memory chip market to about 5 percent, compared to 13 percent for Western Digital and 11 percent for Micron, according to research firm Yole Intelligence.
NAND production in China has grown to more than 23 percent of the world market from 14 percent in 2019, while US production has decreased from 2.3 percent to 1.6 percent during the same period, Yole said. Nearly all of the US firms manufacturing NAND flash carry out production overseas.
A massive $52 billion (£43bn) subsidy package passed by the US Congress last week aims to encourage more domestic production.
Firms receiving funds under the so-called Chips Act would be prohibited from building or expanding manufacturing for certain advanced chips in countries including China, including advanced memory chips at a level to be determined by the administration.
Last month a report said the US administration was considering sanctions aimed at restricting the advance of Chinese chip maker Semiconductor Manufacturing International Corp (SMIC), without slowing the flow of chips into the global economy during a period of ongoing shortages.