Chinese electronic component manufacturers are at the heart of US-China tensions. 36 companies including Yangtze Memory Technologies have just been added to the famous commercial blacklist of the US Department of Commerce.
Relations between the US and China are at an impasse. Applying restrictions on one side or the other, a step back seems impossible for the two countries as the list of sanctions is long. This week, the Biden administration announced that it plans to put Yangtze Memory Technologies (YMTC) and 35 other Chinese companies on a trade blacklist called the Entity List, which would prevent them from buying certain American components. Bloomberg indicates that a source familiar with the matter confirms the expansion of the list this week by the US Department of Commerce. The two economic superpowers are not embarking on their first attempt at the subject, as the United States has already used this means to blacklist competitive Chinese companies and strike a blow to their activities on American soil.
YMTC, recently described as the new technological leader in the sector by the company TechInsight, was to produce memory chips for Apple terminals in particular. The Cupertino company initially announced its plan to sign a contract with this Chinese subcontractor cheaper than its competitors before abandoning it. In particular, the company is accused of maintaining very close ties to the Chinese government and the country’s army. According to a Nikkei Asia article published on October 17, the company has been caught in the web of US restrictions on Chinese manufacturers. Last October it was already on the list of unverified devices. In plain English, this means that no design, technology, specification or document can be shared with the company. American employees who worked in basic technical positions within YMTC were also forced out of the company. Other Chinese companies have borne the brunt of these restrictions, such as Huawei Technologies or Semiconductor Manufacturing International Corporation (SMIC).
A long-term showdown between the two countries
As a reminder, companies on the US blacklist, called the “Entity List” (or commercial blacklist), cannot purchase technology from US suppliers unless they obtain a special export license from the Department. American of Commerce. Prevented from purchasing certain components, the targeted companies could see their supply chains disrupted and their operations reduced. Last August, US President Joe Biden signed into law to support the semiconductor industry, the Chips and Science Act. This was approved by Congress last July and allows for the release of an envelope of $52.4 billion in grants. The goal is clear: to fight the shortage of chips and reduce the country’s dependence on China.
Reuters reports that during a briefing at the Chinese Foreign Ministry on Thursday, spokesman Wang Wenbin said he urged the United States to stop introducing unfair and discriminatory practices against some Chinese companies. “China will continue to safeguard the legitimate and legitimate interests of Chinese enterprises,” he added. However, the Biden administration has made a gesture in favor of Beijing. Several Chinese companies will soon be removed from a so-called “unverified” trade list, also known as the trade red list. Their number as well as their name have not yet been revealed. When a company is placed on this unverified list, it means that the US authorities are unable to prove that these companies are not linked to the Chinese government or its military. This measure triggers a 60-day countdown in which companies must prove that their activities do not endanger US national security. The country then conducts site visits to determine whether it can trust them to receive exports of sensitive US technology. Such US inspections in China require approval from the Chinese Ministry of Commerce. When a company is on this blacklist, it is often an intermediate step before being added to the blacklist, like YMTC.
Also remember that this week China filed a dispute with the World Trade Organization (WTO) in an attempt to roll back trade controls imposed by the United States, arguing that they will disrupt global trade.