WASHINGTON, Dec 15 (Reuters): The Biden administration on Thursday added Chinese memory chip maker YMTC and 21 “major” Chinese players in the artificial intelligence chip sector to a trade blacklist, expanding its crackdown on China’s chip industry.
The U.S. said it feared that American technology could be diverted to previously blacklisted Chinese tech giants Huawei Technologies Co Ltd. YMTC has been added to the list in the crosshairs of Govt. [RIC:RIC:HWT.UL] Hivision (002415.SZ). The move, detailed in the Federal Register, would prevent YMTC’s suppliers from shipping US goods to it without a cumbersome license.
21 Chinese AI chip firms, including Cambricon Technologies Corp ( 688256.SS ) and CETC, face tougher penalties, with the U.S. government effectively blocking their access to technology made anywhere in the world using U.S. equipment. .
Another notable name was PXW Semiconductor Manufacturing Co., a startup chip fab backed by the Shenzhen city government and led by a former Huawei executive.
As the Chinese government seeks to remove barriers between the military and civilian sectors, “we must act decisively to deny US national security interests access to advanced technologies,” Export Administration Commerce Assistant Secretary Thea Kendler said in a statement.
YMTC, Cambricon, CETC and PXW did not immediately respond to requests for comment. Shares in Cambricone, which went public in 2016 four years after it was spun off from the Chinese Academy of Sciences, a government think tank, fell 6% at the open on Friday.
The Chinese embassy in Washington said the United States was engaging in “blatant economic coercion and intimidation in the technology sector” that undermined normal business activities between Chinese and American companies and threatened the stability of global supply chains.
“China will resolutely protect the legal rights and interests of Chinese companies and institutions,” it added.
The move follows sweeping export restrictions Beijing imposed in October to slow its technological and military advances, including measures to block China’s access to US chip-making equipment and cut off some chips made anywhere in the world using American equipment.
It comes as Congress prepares to finalize legislation to bar the US government from buying products containing semiconductors made by YMTC, Chinese memory chipmaker CXMT or China’s top chipmaker SMIC.
The Commerce Department on Thursday targeted nine Chinese firms for allegedly trying to support China’s military modernization, including Shanghai Microelectronics Equipment Group Co Ltd (SMEE), China’s only lithography company.
SMEE did not immediately respond to a request for comment.
It singled out Chinese surveillance camera maker Tianjin Tiandi Wei Technologies for participating in “China’s campaign of repression, mass arbitrary detention, and high-tech surveillance against Uighurs.” Thiandi did not immediately respond to a request for comment.
A total of 35 Chinese firms and YMTC’s Japan-based subsidiary were added to the US trade blacklist, known as the Entity List.
Thursday’s announcement was not all bad news for Beijing. The Biden administration removed a subsidiary of Wuxi Biologics, the company that makes ingredients for AstraZeneca’s ( AZN.L ) COVID-19 vaccine, and 26 other Chinese firms from the de-verified list thanks to successful site visits.
Two Chinese companies removed from the Unverified List – YMTC and SMEE – were added to the Entity List.
Reuters reported on Wednesday that such a move is underway. Reuters reported earlier this year that U.S. officials were able to conduct a site visit to Wuxi Biologics before removing another of the company’s subsidiaries from the unconfirmed list in October.
Wuxi did not respond to a request for comment.
If the United States cannot complete on-site visits to China to determine whether they can be trusted to receive sensitive US technology exports and inspections, which require approval from the country’s Ministry of Commerce, the companies will be added to the non-verified list.
The addition to the unconfirmed list prompts U.S. suppliers to exercise greater caution before shipping to targeted companies.
Commerce Department officials said the U.S. rule announced in October prompted greater cooperation from Beijing on site inspections. Under that law, if a government prevents U.S. officials from conducting site checks on companies on the unverified list, Washington can add them to the entity list after 60 days.
Under that new policy, the Commerce Department on Thursday removed nine Russian entities from the non-verified list and added them to the entity list because the United States cannot conduct site visits.
Top Senate Democrat Chuck Schumer announced new fines on YMTC, which is under investigation by Reuters for allegedly violating US export restrictions by supplying chips to Huawei without a license.
“The YMTC poses an immediate threat to our national security, so the Biden administration must act quickly to prevent the YMTC from gaining an inch of military or economic power,” he said in a statement.
Reporting by Alexandra Alper; Additional reporting by David Shepherdson, Doina Chiaku and Michael Martina; Josh Horwitz in Shanghai; Editing by Chris Sanders, Lincoln Fest Doina Chiaku, Jonathan Otis, William Mallard
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