The US government on Thursday added three dozen Chinese firms to its export blacklist, including the country’s top flash memory chip maker, marking Washington’s latest effort to block China from a global hi-tech supply chain that supports the production of advanced military equipment.
In a further blow to China’s embattled semiconductor industry, the US Commerce Department’s decision to put 36 Chinese groups on its Entity List effectively blocks the companies from accessing critical commodities, software and technologies in the US unless their American suppliers gain explicit sales approvals.
“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 Alan Estevez, the US Commerce Department’s industry and security undersecretary, in a statement on Thursday.
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Most notable among the newly added companies is Wuhan-based Yangtze Memory Technologies Co, the biggest player in China’s flash memory market and a state-owned company estimated to control 5 to 6 per cent of the global NAND flash memory market. A YMTC subsidiary in Japan was also included in the latest trade blacklist.
The two companies were already added to the Commerce Department’s “Unverified List” in October over concerns they could divert US technologies to previously blacklisted Chinese telecoms equipment giant Huawei Technologies Co and surveillance camera maker Hikvision.
The latest additions to the Entity List followed Washington’s export controls update in October restricting Beijing’s ability to acquire high-end US chip technology, equipment and even blocks US citizens from working for certain firms. In November 2021, the US government added a dozen Chinese firms to this export blacklist.
Other well-known names on the expanded Entity List include Shanghai Micro Electronics Equipment, which is perhaps Beijing’s best current hope to produce machines that can manufacture advanced chips. The firm was previously on the Unverified List.
The US also blacklisted Tiandy, one of the top video surveillance suppliers in the world, accusing it of facilitating “hi-tech surveillance” against Uygurs and other Muslim minority groups in Xinjiang Uygur autonomous region and helping Iran obtain items originating in the US.
China’s top memory chip maker could see production disruptions from blacklisting
Among the new names on the list, 21 were identified as major players in research and development, manufacturing and sales of AI chips with close ties to government organisations supporting China’s defence industry.
The Commerce Department also applied the so-called foreign direct product rule to 21 of the 36 companies on the Entity List – including YMTC and its subsidiary – to prevent them from obtaining US-origin technologies from other countries.
Another seven entities on the list were identified as supporting the Chinese military’s efforts to develop hypersonic weapons and ballistic missile systems.
In response to an earlier report about Washington’s expanded sanctions list, China’s foreign ministry criticised the US for overstretching the notion of national security, abusing export control measures and weaponising sci-tech issues.
“This is blatant economic coercion and bullying in the field of technology,” the ministry’s spokesman Wang Wenbin said at a press conference on Wednesday.
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Chinese Foreign Minister Wang Yi, speaking on Monday during a virtual meeting with his South Korean counterpart, called on Seoul to oppose the US chip export controls.
On the same day, the Chinese commerce ministry lodged a formal complaint at the World Trade Organization against US restrictions on semiconductors and other hi-tech exports to Chinese companies. It argued the step was “necessary” to defend China’s legitimate interests.
While the addition of companies to the Entity List exacerbates the hi-tech supply stand-off, the Commerce Department simultaneously announced a move that could ease some pressure on Chinese hi-tech firms. It removed 25 Chinese companies from a watch list of “unverified” firms that might have military connections, following end-user checks.
Companies are put on that list when the US government cannot rule out the possibility that they are military suppliers, and their removal from the list suggests there would be no further sanctions.
However, the Commerce Department moved nine Russian companies to the Entity List from the Unverified List, citing an inability to complete end-user checks.
US chip exports ban to have little impact on PLA for now: analysts
“When a host government facilitates a check that results in our ability to confirm a company’s bona fides, the company comes off the Unverified List, as demonstrated by today’s 25 removals of Chinese companies from our restricted party lists,” said Matthew Axelrod, assistant secretary of commerce for export enforcement, in the statement.
“But when a host government persists in preventing a check, there are real consequences, as demonstrated by today’s addition of nine Russian parties to the Entity List.”
When asked about the US plan to remove some Chinese entities from the Unverified List, Beijing’s foreign ministry repeatedly urged Washington to “stop targeting specific Chinese companies with discriminatory and unfair measures”.
“China will continue to firmly defend the legitimate and lawful rights and interests of Chinese companies,” Wang of the foreign ministry said on Thursday.
More from South China Morning Post:
- US to add more than 30 Chinese companies, including Yangtze Memory, to trade blacklist
- Tech war: China’s embattled semiconductor sector sees first signs of relief from US sanctions
- Tech war: US officials said to start talks with Chinese chip equipment maker Naura Technology Group over new export restrictions
- Tech war: China’s chip self-sufficiency drive under siege as new US export controls tighten access to advanced semiconductors
- US defence department adds drone maker DJI and BGI Genomics to blacklist it links to Chinese military
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