U.S. Sanctions Ruin China Chipmakers' Expansion Plan

Sweeping export bans imposed by the US last fall have held up plans by major Chinese chipmakers to expand operations, dealing a setback to the government's ambitions to make the country a semiconductor powerhouse, Shunsuke Tabeta reported for Nikkei.

Photo Insert: Uncertainty was the prevailing mood at the flagship production site of Yangtze Memory Technologies Corp. (YMTC) 40 kilometers east of Wuhan.

Uncertainty was the prevailing mood at the flagship production site of Yangtze Memory Technologies Corp. (YMTC) 40 kilometers east of Wuhan. YMTC engineers and technicians had no idea when its second plant, originally slated to start up in late 2022, would actually come online.

"Things like electrical equipment have been set up, but the installation of chipmaking equipment hasn't started yet," one said. YMTC was founded in 2016 by Tsinghua Unigroup in partnership with the National Integrated Circuit Industry Investment Fund, known as the "Big Fund."

It began producing NAND flash memory chips in 2019 but after Unigroup went bankrupt, the Big Fund and local authorities took over YMTC. It focused on competing in the global NAND market, targeting Apple as main user of its chips. The US company balked at the idea.

The company broke ground in 2020 on a second factory costing 100 billion yuan ($15 billion) -- to triple capacity. But its ascent has stalled since the US imposed broad, stringent curbs on exports of technology and gear for making advanced semiconductors, as well as restrictions on US nationals working for Chinese chipmakers.

That September, Simon Yang, who reportedly holds a US passport, stepped down as CEO of YMTC. Then American engineers from US-based chipmaking equipment companies who had supported YMTC's expansion plans left.

The delays forced YMTC to cut 10% of jobs.

ChangXin Memory Technologies, which makes DRAM chips using advanced technology covered by the sanctions, has also had a wrench thrown into its plans. CXMT finished a new office building for a planned second plant located near the company's headquarters in the city of Hefei. But the construction of the production facility itself is facing lengthy delays.

"We planned to begin operations in 2023, but it won't happen until 2024 or 2025 at the soonest," said a CXMT engineer. The construction of CXMT's new research and development center appears to have made hardly any progress as well.

"The hiring of graduate students has been suspended temporarily," said the engineer, who added the company is cutting 5% to 7% of staff, depending on the department. China’s plan to be 50% self-sufficient in semiconductors has been battered by US sanctions, with experts saying the current 24% level may only inch up to 30% by 2030.

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