China Eager to Counter US Sanctions by Funding Affected Industries
According to Bloomberg, MIIT officials invited executives from several semiconductor and supercomputer businesses, including 3D NAND memory producer Yangtze Memory Technologies Co. and supercomputer maker Dawning Information Industry Co., commonly known as Sugon, to discuss the impact of American sanctions on China’s chip and supercomputer industries. While chipmakers like Semiconductor Manufacturing International Co. and Yangtze Memory have both obtained financing from government-controlled funds and sold products to local firms, many Chinese high-tech companies, including Huawei, Inspur, Sugon, and ZTE, have historically relied on government-funded projects for growth. According to sources that know the situation, the local IT sector will generate enough demand for the impacted enterprises. Whether they can meet that demand is the question. After the U.S. government levied broad penalties against China, both Sugon and YMTC were virtually wiped from the global semiconductor and semiconductor production supply chains. Sugon cannot purchase high-performance computer chips from American businesses without first obtaining the necessary export license from the U.S. Department of Commerce due to Sugon being on the U.S. entity list since mid-2019. Meanwhile, YMTC cannot acquire cutting-edge American chipmaking equipment to produce 3D NAND with 128 or more layers. Additionally, YMTC has been added to the unverified list (UVL), and the 3D NAND manufacturer will be placed on the entity list if U.S. government experts or auditors cannot confirm within 60 days that Chinese enterprises with military links do not use YMTC’s goods. The U.S. government also prohibited American citizens’ ability to “assist the development, or manufacture, of ICs” at specific PRC-based fabs without a license, in addition to limiting the ability of American chip toolmakers to provide cutting-edge WFE to Chinese businesses. Based on how the production process has been delayed due to sanctions, such moves have created uncertainty in the worldwide sector.
