US blacklists China's major chipmakers in latest crackdown

The Biden administration has added Chinese memory chipmaker YMTC and 21 "major" Chinese players in the artificial intelligence chip industry to a trade blacklist, broadening its crackdown on China's chip industry.

YMTC, long in the crosshairs of the US government, was added to the list on Thursday over fears it could divert American technology to previously blacklisted Chinese tech giants Huawei Technologies Co Ltd and Hikvision. 

The move, laid out in the Federal Register, will bar YMTC's suppliers from shipping US goods to it without a difficult-to-obtain license.

The 21 Chinese AI chip entities being added to the trade blacklist, which includes Cambricon Technologies Corp and CETC, face an even tougher penalty, with the US government effectively blocking their access to technology made anywhere in the world with US equipment.

As the Chinese government seeks to remove barriers between its military and civilian sectors, "US national security interests require that we act decisively to deny access to advanced technologies,” Assistant Secretary of Commerce for Export Administration Thea Kendler said in a statement.

Top Senate Democrat Chuck Schumer heralded the imposition of new penalties on YMTC.

"YMTC poses an immediate threat to our national security, so the Biden Administration needed to act swiftly to prevent YMTC from gaining even an inch of a military or economic advantage,” he said in a statement. 

READ MORE: US blocks flow of flagship AI chips to China

Slowing Beijing's technological, military advances

The move builds on sweeping export controls imposed on Beijing in October to slow Beijing's technological and military advances, including measures to curb China's access to US chipmaking tools and cut it off from certain chips made anywhere in the world with American equipment.

It also comes as Congress prepares to finalize legislation to bar the US government from buying products that contain semiconductors made by YMTC, Chinese memory chipmaker CXMT or China's top chip manufacturer SMIC.

The Commerce Department on Thursday also targeted nine Chinese entities for allegedly seeking to support China's military modernization, including Shanghai Micro Electronics Equipment Group Co Ltd (SMEE), China's only lithography company. A total of 35 Chinese entities were added to the US trade blacklist, known as the entity list, as well as YMTC's Japan-based subsidiary.

The Chinese Embassy in Washington said the United States was engaging in "blatant economic coercion and bullying in the field of technology," undermining normal business activities between Chinese and American companies and threatening the stability of global supply chains.

"China will resolutely safeguard the lawful rights and interests of Chinese companies and institutions," it added.

READ MORE: Chip wars: US faces Dutch pushback on China’s semiconductor curbs

Removing 26 Chinese entities from the unverified list

Thursday's announcements weren't all bad news for Beijing.

The Biden administration removed a subsidiary of Wuxi Biologics, a company that makes ingredients for AstraZeneca's Covid-19 vaccine, and 26 other Chinese entities from the so-called unverified list thanks to successful site visits.

Two of the Chinese companies removed from the unverified list - YMTC and SMEE- were added to the entity list.

Companies are added to the unverified list if the United States cannot complete on-site visits to determine whether they can be trusted to receive sensitive US technology exports, inspections which in China require approval from the commerce ministry.

READ MORE: Why China’s big chip breakthrough has rattled the US