US Adds YMTC Chip Manufacturer To Unverified Company List

JAKARTA - The United States on Friday, October 7 added major Chinese memory chip maker YMTC and 30 other Chinese entities to a list of companies that US officials could not verify. The decision escalates US tensions with Beijing and kicks off a 60-day workday that could trigger much tougher penalties.

The new list is the first in a series of new restrictions announced Friday on technology exports to China aimed at blocking the country's military advances. The crackdown includes restricting access to chip-making tools for Chinese companies including Yantze Memory Technologies Co, Reuters reported a day earlier.

US senators from both sides have called for YMTC, a fast-growing Chinese chipmaker, to be placed on a trade blacklist known as the "entity list." According to the Joe Biden administration, the company, founded in 2016, poses a "direct threat" to US chip firms,

The YMTC and the Chinese embassy in Washington did not respond to requests for comment from Reuters on this report.

YMTC is also being investigated by the Commerce Department over allegations of whether it violated US export controls by selling chips to blacklisted Chinese telecommunications company Huawei Technologies Co Ltd. The chip is also being evaluated by Apple Inc for inclusion in some of its iPhones in China, also a major concern for US lawmakers and the Biden administration.

The company was added to the unverified list because the United States was unable to complete an on-site visit to determine whether they could be trusted to accept exports of sensitive technology from the United States. US inspections of Chinese companies require approval from China's commerce ministry.

U.S. Exporter must perform additional due diligence before shipping items to entities placed on the "unverified list", such as the 31 added last Friday, and may have to apply for more licenses.

Under the Biden administration's new policy, if the government prevents US officials from conducting site checks on companies that place unverified lists, Washington will begin the process of adding them to the entity list after 60 days.

The YMTC entity list would further escalate tensions with Beijing and force its US suppliers to seek hard-to-obtain licenses from the US government before shipping their products on even the lowest-tech goods.

Not all of the measures announced last Friday are bad news for China. The United States removed a unit of Wuxi Biologics, maker of ingredients for AstraZeneca's COVID-19 vaccine, from an unverified list. Reuters reported last summer that US officials could carry out inspections of the Wuxi city site, a springboard for removal from the list.

A spokesman for Wuxi Biologics said the company was pleased the Wuxi site had been removed from the list, given the inspection in June. The company hopes to schedule an inspection of its Shanghai subsidiary, which was also placed on the unverified list in February, he added.