Chinese memory chip maker YMTC files lawsuit in US court, accusing website publisher of libel

China's top flash memory chip maker Yangtze Memory Technologies Corp (YMTC) has filed a lawsuit against a Danish consulting firm and its senior executive - the publisher of China Tech Threat - for libel as Western narratives about potential national security threats from Chinese tech companies proliferate.

Wuhan-Based YMTC sued Copenhagen-based Strand Consult and its executive vice-president Roslyn Layton in the Northern District Court of California in early June for publishing several false reports, which damaged its market reputation and business relations, according to a court document seen by the Post.

YMTC said in the document that China Tech Threat (CCT) began publishing "outlandish and demonstrably false statements" about the company and its products starting in September 2020. In a 2022 report titled How Apple's partnership with Chinese military chip maker YMTC threatens American National Security, co-authored by Layton, YMTC was called a "Chinese semiconductor maker with known ties to the Chinese military", an accusation that YMTC has vehemently denied.

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The CCT report also described YMTC's memory chips as being "equipped with spyware [that] could funnel collected data back to Beijing" and "exfiltrate data", thereby "compromising iPhone users' security and privacy", which YMTC called "pure fiction" because memory devices do not process such functions.

YMTC's fourth-generation TLC 3D flash memory. Photo: Handout alt=YMTC's fourth-generation TLC 3D flash memory. Photo: Handout>

"The falsehoods through China Tech Threat have caused irreversible harm to YMTC's reputation and business relationships," the chip maker said in the document.

"YMTC advocates for healthy competition to drive innovation and strongly stands against these kinds of anti-competitive practices. We look forward to setting the record straight," the company said in response to a request for comment by the Post.

In an earlier reply to the Post, YMTC said it "has never supplied its technology or products for any military use".

"YMTC provides products and services for commercial and civil customers' usage only. YMTC has no knowledge of any military-related project that has adopted YMTC's products," it said.

Layton did not immediately respond to a request for comment when reached via her LinkedIn page.

Last November, YMTC filed a lawsuit against US memory chip maker Micron Technology for patent infringement, accusing it of "freeriding" to protect its market share. It alleges that Micron and its subsidiary Micron Consumer Products Group together infringed on eight YMTC patents.

The YMTC logo is placed next to the Chinese flag in this illustration photo. Photo: Shutterstock Images alt=The YMTC logo is placed next to the Chinese flag in this illustration photo. Photo: Shutterstock Images>

The latest legal saga comes as YMTC and Chinese foundries have sought to overcome escalating US sanctions on the export of advanced semiconductor tools and services to China. Washington blacklisted the Chinese memory chip maker in December 2022. In April 2023, Beijing launched a cybersecurity review into Micron.

The US measures have so far not derailed YMTC's progress despite causing hiccups amid a surge in demand for its chips. The firm has since forged closer ties with domestic suppliers to replace US components in its chip-making equipment to protect its production integrity, the Post previously reported.

As China strives to cut reliance on foreign semiconductor products amid increased export controls, YMTC saw a surge in demand for its flash memory chips over the past few months, showing it has become a top choice for NAND-based data storage solutions for government-backed projects.

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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