US Ready To Implement Trade Restrictions On CXMT Following China's Ban On Micron

Mike Gallagher, a US lawmaker, called for a reply to the chip trade war with China. (photo: twitter @radiotalkermike)

JAKARTA - The United States Department of Commerce must impose trade restrictions on Chinese memory chip manufacturer Changxin Memory Technologies (CXMT). The policy came after this week Beijing banned the sale of multiple chips by US-based Micron Technology Inc. This was disclosed by the chairman of the Chinese committee at the US House of Representatives on Tuesday, May 23.

The restrictions by China's cyber regulator on Micron are the latest developments in a widespread trade dispute between the two largest economies in the world. China's move sparked a strong reaction from key lawmakers and the White House.

White House spokesman Karine Jean-Pierre told reporters last Tuesday that China's announcement of Micron was "not based on facts."

The White House said the Commerce Department was "directly involved" with China regarding Micron, a memory chip manufacturer that is important for products ranging from mobile phones to data center servers.

Senate Majority Leader Chuck Schumer, a member of the Senate's most senior Democratic Party, also said Tuesday he was talking to business communities in general and allies about the matter.

A spokesman for the Chinese Embassy in Washington has not yet responded to a request for comment. A CXMT representative also could not immediately be reached for comment. Spokesperson for the Commerce Department also declined to comment.

Mike Gallagher, an influential lawmaker who led the committee of choice on China and has urged President Joe Biden's administration to take a firmer stance against China. He is the only member of parliament to so far call for retaliatory action.

"The US must make it clear to the People's Republic of China that the US will not tolerate economic coercion against its companies or its allies," Gallagher said in a statement.

"The Commerce department should immediately add ChangXin Memory Technologies to the entity list and ensure there is no US technology, regardless of specifications, given to CXMT, YMTC, or other PRC companies operating in the industry," he added.

CXMT is China's leading producer of the DRAM memory chip and a domestic competitor who is most likely to benefit if Micron is barred from entering the big Chinese chip market.

YMTC, or Yangtze Memory Technologies Corp, is a Chinese chipmaker that was added to the entity list in December 2022.

Gallagher also said the Commerce Department should ensure this. "No US export license is granted to foreign companies that produce semiconductor memory in (China) used to fill Micron vacancies, and our allies in South Korea, which have experienced economic coercion of the Chinese Communist Party in recent years, must also act to prevent filling the void," Gallagher said.

Samsung Electronics Co Ltd and SK Hynix from Korea, both operating a memory chip factory in China, and other non-China companies managed to avoid a significant impact US export control of chip manufacturing equipment imposed in October. But they operate with the exception of an expirationable or repealable US regulation.

Samsung and SK Hynix have not immediately responded to requests for comment.

Analysts believe that chips from CXMT are two to three generations behind compared to industry leaders such as Micron, Samsung, and SK Hynix.

Gallagher's call comes weeks after US chip manufacturing equipment manufacturers said they received clarification from US export control authorities that would allow them to deliver more equipment to China than originally anticipated.

Lam Research Corp, a leading manufacturer of tools for memory chip manufacturing, told investors the clarification could result in additional hundreds of millions of dollars in sales from China.

Clarification from the Commerce Department relates to how memory chip features are measured for the purpose of implementing export control rules.

"How such chips are measured can vary depending on the tools and materials used to make them and how they design them," said Dan Hutcheson, deputy chairman of TechInsights Inc., which produced research reports on the semiconductor industry.

"Even among memory chip manufacturers and buyers, there is often a big debate about this," Hutcheson said.