Biden plays with global chip supply by halting operations of US companies in China

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The United States has taken the next step in its most daring effort to disrupt the Chinese military by blocking access to memory chips and chip-making equipment that are crucial for security systems. modern defenses such as stealth aircraft, satellites and cruise missiles. The Wall Street Journal reported yesterday that U.S. chip equipment vendors have furloughed dozens of employees with key expertise and suspended business operations of Yangtze Memory Technologies Co. (YMTC), "China's top maker of memory chips".

This is different from previous actions the United States has taken targeting specific technologies or individual companies, the Journal reported. Among the major suppliers that "people familiar with the matter" told the WSJ are halting operations are two large U.S. companies, KLA Corp. and Lam Research Corp. Just a few weeks ago, investment advisory firm The Motley Fool suggested that Lam Research "could be one of the most important companies in the world", noting that Intel is a key customer and that it serves a global market. Reuters reported that the loss of China's UCK market has restricted the company's access to its "largest geographic market, generating $2.66 billion in sales".

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YMTC and Lam Research did not respond to requests for comment from Ars or the WSJ. KLA Corp. Communications Director Randi Polanich confirmed to Ars that “at this time, we cannot comment.”

Block YMTC, but also impact global supply

Last month, the US Department of Commerce announced plans to "keep advanced technologies out of the wrong hands" by restricting memory chip sales to China and Russia. Shortly after, YMTC, a Chinese state-owned manufacturer, was discovered to be violating US export controls and shipping memory chips to Chinese telecommunications company Huawei. It seemed likely then that the Biden administration would respond to increased pressure from right and left to keep memory chips out of China by cutting YMTC, and that's what happened this week. p>

The Wall Street Journal reported that without key experts at U.S. factories, Chinese chipmakers like YMTC could be "cut off from the upgrades, maintenance expertise and future technology they need to develop fleas".

However, according to a Reuters report published today, the latest US export restrictions on China have also introduced "unintended consequences" that could affect anyone waiting for the supply. chip world is stabilizing. By forcing companies like KLA and Lam Research to suspend operations and preventing foreign chip tech companies based in China from exporting products, the United States could further delay shipments and disrupt the global supply chain. as well as US access to memory chips.

For non-Chinese companies based in China, the US apparently plans to review licenses on a case-by-case basis to approve exports, but no Chinese company should get a reprieve from the export rules, said reported Reuters.

In an earlier report, Reuters suggested that U.S. export restrictions could prevent China from having memory chips, but that without other countries joining the U.S. in restrictions similar to the export, an official told Reuters that "the unilateral controls we are putting in place will lose their effectiveness over time."

A spokesperson for the U.S. Commerce Department told Reuters that the Biden administration will likely adapt as needed to avoid disruptions to access to U.S. memory chips, saying "the department hopes to get feedback from stakeholders on the rule and may consider modifications".