American suppliers have suspended work with a major Chinese manufacturer of memory chips
U.S. suppliers of chip manufacturing equipment are recalling employees from a leading Chinese memory chip maker and ceasing business with it, according to people familiar with the matter. This is reported by WSJ.
Yangtze Memory Technologies Co. faces freezing support from key suppliers including KLA Corp. and Lam Research Corp.
The suspension follows sweeping U.S. restrictions on China’s chip sector last week, ostensibly to prevent U.S. technology from bolstering China’s military power, though the impact might reach further into other industries.
US vendors have suspended support for equipment already installed at YMTC and temporarily halted the installation of new tools. Suppliers are also temporarily withdrawing their staff working at YMTC.
Manufacturer of chip manufacturing equipment Applied Materials Inc. on Wednesday cut its sales forecast for the current quarter by about $400 million, citing the restrictions. The company, one of the largest manufacturers of chip manufacturing equipment in the world, counts among its many customers the leading Chinese chip manufacturers. In the second quarter, it got more than 27% of its sales from China, or nearly $1.8 billion. A large portion of these sales are to multinational firms that operate in China and are expected to be exempt from controls aimed at Chinese chipmakers.
Applied said it continues to obtain export licenses and permits, but added that it expects a similar impact on sales in the first quarter of next year.
The YMTC plant employs dozens of employees of American manufacturers of chip manufacturing equipment. They will play a critical role in managing the plant and developing its production capacity as they bring their expertise in high-tech chip manufacturing equipment, people familiar with the situation said. If the shutdown continues, customers like YMTC will face being cut off from the upgrades, maintenance expertise and future technologies they need to develop chips.
While the moves may be temporary, they are a direct sign of business disruptions facing Chinese chipmakers and U.S. technology suppliers as Washington ramps up efforts to clamp down on China’s developing semiconductor industry. The U.S. export controls, which restrict companies shipping chips and chip-making equipment to China, are among the most extensive the U.S. has imposed against China’s semiconductor industry. They differ from previous actions, which often targeted individual companies and a narrower set of technologies.
The rules announced Friday by the U.S. Commerce Department add new licensing requirements for advanced semiconductor and chip manufacturing equipment destined for a facility in China. Decisions on issuing licenses to facilities owned by American and allied US firms will be made on an individual basis, while facilities owned by China will be subject to a presumption of license denial.
Intel Corporation and South Korean memory maker SK Hynix said on Wednesday that they had secured exemptions to keep their facilities in China. Other US and allied firms are expected to receive similar approvals.