The Chinese government criticized the United States for adding 36 Chinese semiconductor firms to its “entity list, “which will restrict them from purchasing American goods and services.
The sanctioned companies include Yangtze Memory Technologies Co (YMTC), the world’s sixth-largest Nand flash memory maker, and Cambricon Technologies, an artificial intelligence chip start-up, according to the US Commerce Department’s Bureau of Industry and Security (BIS).
The foreign ministry said China would resolutely safeguard the lawful rights and interests of Chinese companies and institutions. Chinese officials said China and the EU should join hands to oppose any move that promotes the decoupling of supply chains and protectionism in the name of safeguarding national security.
Some Chinese commentators said people should not be over-worried about the US sanctions, which would not hurt China as long as it could still produce 28nm chips. Some analysts said Chinese chip makers would face a heavy blow if Dutch chip equipment maker ASML was banned from selling its deep ultraviolet (DUV) lithography to them.
After YMTC and 30 other Chinese entities, including some chip and biotechnology firms and universities, were added to the BIS’s unverified list on October 7, some of them reportedly took the initiative to invite US trade officials to check their production lines in a bid to clear their names from the list.
The BIS said Thursday that a total of 25 Chinese parties were being removed from its unverified list due to satisfactory completion of end-use checks and verification of those entities’ bona fides, including in cooperation with the Chinese government.
However, the BIS also added 36 Chinese firms to the entity list, which applies stringent license requirements that will severely restrict these entities’ access to commodities, software, and technologies subject to the Export Administration Regulations.
It said YMTC and Shanghai Micro Electronics Equipment (Group) Co Ltd were moved from the unverified list to the entity list as they posed a significant risk of becoming involved in activities contrary to the national security or foreign policy interests of the US. It said the change was not related to the Chinese government’s actions preventing completion of an end-use check.
It also accused YMTC, Yangtze Memory Technologies (Japan) Inc and Hefei Core Storage Electronic Ltd of supplying products to parties on the entity list and the sanctioned Huawei Technologies and Hangzhou Hikvision Digital Technology.
“Today’s rules further the Biden Administration’s efforts to deny the People’s Republic of China access to advanced technologies for military modernization and human rights abuses,” said Thea Dwosh Rozman Kendler, assistant secretary of commerce for export administration.
Besides, the US Congress on Thursday passed a bill that would prevent the US government from purchasing or using semiconductors produced by YMTC, SMIC and ChangXin Memory Technologies, which allegedly have links to Chinese state security and intelligence organisations.
“The US has been stretching the concept of national security, abusing export control measures, engaging in discriminatory and unfair treatment against enterprises of other countries, and politicizing and weaponizing economic and sci-tech issues,” said Wang Wenbin, a Chinese foreign ministry spokesperson. “This is blatant economic coercion and bullying in the field of technology.”
On Monday, China’s Ministry of Commerce said it had launched a trade complaint at the World Trade Organization against the US over its chip export control measures.
A Jiangsu-based commentator wrote in an article on Monday that YMTC and ChangXin Memory Technologies were sanctioned as the US was worried by their robust growth and technological breakthroughs in recent years. He said the two firms might lose customers amid the US sanctions but they would survive and continue to grow over the long run.
In July, the US banned US chipmaking tool suppliers, including KLA Corp, Lam Research Corp and Applied Materials Inc, from shipping tools capable of making 14nm or smaller chips to Chinese firms.
Li Qi, a Chinese columnist, said the negative impact of the US sanctions on Chinese chip firms was manageable as chip giants such as SMIC were actually not receiving many orders for 14nm or smaller chips. He said Chinese companies would not be affected by any sanctions once they could completely make 28nm chips by themselves.
Andrew Wong, chairman and chief Executive Officer at Anli Holdings and also a stock analyst, said China’s semiconductor technology was still lagging five to 10 years behind that of the US and Europe. Wong said it would be a heavy blow to Chinese chip firms if they could not buy more DUV tools from ASML as it would take a decade for China to build its own lithography.
Media reports said the Chinese government was going to spend 1 trillion yuan (US$143 billion), mainly through subsidies and tax benefits, to support companies that develop or make their own semiconductors over the next five years.
On Tuesday, Japan and the Netherlands had reportedly agreed in principle to join US-led technology export controls. However, ASML’s Chief Executive Peter Wennink told Dutch newspaper NRC that the company had given up enough of the pre-existing restrictions on its sales to China, including a ban on exports of its extreme ultraviolet (EUV) lithography.
Fu Cong, Chinese Ambassador to the European Union, said in a virtual meeting of the China-EU CEOs and Former Senior Officials Dialogue on Friday that China and Europe should work together to ensure a smooth product supply between the two places. Fu said normal trade should not be interfered with by political or ideological issues.
Chinese Vice Premier Liu He said China hoped to work with the EU in trade, green, digital, financial and technological areas. Liu said he believed that both sides would figure out how to push forward the China-EU Comprehensive Agreement on Investment, which was proposed in 2013 but had not been signed yet.
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