Chinese chip maker YMTC denies ties with Chinese military, says products not for military use

Chinese flash memory chip giant Yangtze Memory Technologies Corp (YMTC) denied it has ties with the Chinese military, saying it is in talks with Washington to address the allegation after it was named on a US Defence Department list of firms that pose national security risks.

"We are in the process of working with the US government to address our inclusion on the 1260H list, which was imposed without prior notification," YMTC said in a statement in response to a Post inquiry on Saturday.

Wuhan-based YMTC said it is an integrated device manufacturer focusing on the design and manufacture of 3D NAND flash memory. "Our technology is not military grade nor fitted for military applications," the statement added.

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"Further, we have not supplied, or been directed by any entity, to supply our technology for military use," the statement said. "As a private company, YMTC is not owned or controlled by the Chinese military and [we] refute any allegation that we pose a threat to US national security."

YMTC is the most well-known Chinese firm among over a dozen Chinese tech companies added earlier this week to the US Defence Department-administrated 1260H list, which was established under the National Defence Authorisation Act for fiscal year 2021. The list is updated annually by the Defence Department.

The Pentagon alleges that these companies pose a national security risk, in an escalation to US-China tensions centred on the hi-tech industry.

Being on the list does not mean a complete ban by the US, but it does render the firms ineligible for Defence Department contracts. Additionally, the label could lead to blacklisting by the US Treasury Department, curbing the companies' business prospects.

The Pentagon on Wednesday also accused artificial intelligence companies Yitu Technology and Beijing Megvii, drone maker Chengdu JOUAV, lidar maker Hesai Technology and tech company NetPosa of having ties to the Chinese military.

US-listed Hesai said in a statement to the Post on Friday that it did not "sell any products to any military in any country", adding that its products are designed and classified for civilian use only.

Hesai said it did not expect any significant disruption to its business.

YMTC, which has received US$7 billion from state-backed investors, is China's best hope to compete in the global 3D NAND market, where China's presence remains scant compared to US and South Korean firms.

In December 2022, the US commerce department added YMTC to a trade blacklist known as the Entity List, citing national security risks. The move has since crippled the chip maker's access to equipment and maintenance services from global semiconductor tool firms such as Lam Research.

Last year, YMTC ramped up its ties with domestic tool makers including Beijing Naura Technologies in a bid to ensure its production continuity.

The US measures have not entirely derailed YMTC's progress, as the company has managed to continue manufacturing advanced 3D NAND products.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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