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U.S. adds China's YMTC and 30 other firms to 'unverified' trade list

Economy Oct 07, 2022 06:43PM ET
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© Reuters. Flags of U.S. and China are seen in this illustration picture taken August 2, 2022. REUTERS/Florence Lo/Illustration
 
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By Karen Freifeld and Alexandra Alper

WASHINGTON (Reuters) -The United States on Friday added China's top memory chipmaker YMTC and 30 other Chinese entities to a list of companies that U.S. officials have been unable to inspect, ratcheting up tensions with Beijing and starting a 60 day-clock that could trigger much tougher penalties.

The new listings were the first of a slew of new restrictions announced on Friday on exports of technology to China aimed at blocking military advances. The crackdown included curbs on access to chipmaking tools for Chinese firms including Yantze Memory Technologies Co (YMTC), as reported by Reuters a day earlier.

U.S. senators from both parties have been calling for YMTC, China's fast-growing chip manufacturer, to be placed on a trade blacklist known as the "entity list." The company, founded in 2016, poses a "direct threat" to U.S. chip companies, according to the Biden administration.

YMTC and the Chinese embassy in Washington did not respond to requests for comment.

YMTC is under investigation by the Commerce Department over whether it violated U.S. export controls by selling chips to blacklisted Chinese telecommunications company Huawei Technologies Co Ltd. Its chips also are being evaluated by Apple Inc (NASDAQ:AAPL) for inclusion in some of its iPhones in China, a major concern for U.S. lawmakers and the Biden administration.

Companies are added to the unverified list because the United States could not complete on-site visits to determine whether they can be trusted to receive sensitive technology exports from the United States. U.S. inspections of Chinese companies require the approval of China's commerce ministry.

U.S. exporters must conduct additional due diligence before sending goods to entities placed on the "unverified list," like the 31 added on Friday, and may have to apply for more licenses.

Under the Biden administration's new policy, if a government prevents U.S. officials from conducting site checks at companies placed the unverified list, Washington will start the process for adding them to the entity list after 60 days.

Entity listing YMTC would further escalate tensions with Beijing and force its U.S. suppliers to seek difficult-to-obtain licenses from the U.S. government before shipping them even the most low-tech items.

Not all the measures announced on Friday were bad news for China. The United States removed a unit of Wuxi Biologics, maker of ingredients for AstraZeneca (NASDAQ:AZN)'s COVID-19 vaccine, from the unverified list. Reuters reported last summer that U.S. officials had been able to conduct an inspection at the Wuxi city site, a stepping stone to removal from the list.

A Wuxi Biologics spokeswoman said the company was pleased the Wuxi site was removed from the list, given the inspection in June. The company looks forward to scheduling an inspection of its Shanghai subsidiary, which also was placed on the unverified list in February, she added.

U.S. adds China's YMTC and 30 other firms to 'unverified' trade list
 

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Comments (5)
Hans Miller
Hans Miller Oct 08, 2022 9:33PM ET
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This has been a long time coming. Chinese companies need to be held to the same standard to be listed as US financial instruments.
Tony Barnes
Tony Barnes Oct 07, 2022 6:56PM ET
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US is such a bully. Wait for China response. The tighter the squeeze the more China will progress. Mark my words.
Michael Chew
Michael Chew Oct 07, 2022 6:51PM ET
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never ending how US wants to treat the rest of the world ? dominance theory
Kaushal Shah
Kaushal Shah Oct 07, 2022 10:09AM ET
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all countries will now no longer take $ as common trading currency. will follow Russian model of controlling their currency by gold instead $. biden lost bettle completely.
Kaushal Shah
Kaushal Shah Oct 07, 2022 10:03AM ET
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biden feels pressure now of loosing midterm elections thats what heat is all about.
 
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