China pumps $1.9 billion into homegrown chip-making firm YMTC

China will invest an additional $1.9 billion in Yangtze Memory Technologies Co. (YMTC), the country’s biggest memory chip producer, to spur the growth of its domestic semiconductor industry, which is currently being cramped by US sanctions.

China’s National Integrated Circuit Industry Investment Fund, a government-backed investment body also known as the Big Fund, will inject the capital into YMTC, Bloomberg reported Friday. The magnitude of the investment shows China’s effort to boost its struggling home-grown chip industry, which is currently facing constraints on its manufacturing capabilities from the US and other countries.

China’s quest for self-reliance

Last month, The Political Bureau of the Central Committee of the Communist Party of China conducted the third collective study on bolstering basic research, according to a report by Xinhua News Agency.

In the group study, Chinese President Xi Jinping urged the country to hasten scientific research so it can become self-sufficient in vital technologies, the report noted.
The president emphasized that the party committees and the government at all levels should strengthen basic research, improve overall coordination, increase policy support, and promote high-quality development of research.

China’s Academy of Science has also provided a plan to create a semiconductor industry in China that can thwart the sanctions levied by the US.

The study on strengthening basic capacity for semiconductor research outlines China’s view of how it can win the technological war with the US.

US ramps up trade bans against China

China is focusing on self-reliance as the US is seeking to prevent Western technology from being used to modernize the Chinese military. On Thursday, the Biden administration added 37 more entities to a trade blocklist, including units of Chinese cloud computing company Inspur.

The organizations were added for, “among other activities, contributing to Russia’s military and/or defense industrial base, supporting PRC military modernization, and facilitating or engaging in human rights abuses in Burma and in the People’s Republic of China (PRC),” the US department of commerce said in a statement.

“When we identify entities that pose a national security or foreign policy concern for the United States, we add them to the Entity List to ensure we can scrutinize their transactions,” said Assistant Commerce Secretary, Thea D. Rozman Kendler.

The commerce department accused Inspur of procuring and attempting to procure US goods to support China’s military modernization efforts.

In early October, the US issued export controls that restrict US firms from selling advanced semiconductors as well as equipment required to make them to some Chinese manufacturers unless they receive a special license.

In mid-December, the administration expanded those restrictions to include 36 more Chinese chipmakers from accessing US chip technology, including Yangtze Memory Technologies Corporation (YMTC), the target of the Chinese government’s latest investment.

Now, the latest move by the US will perhaps stir up more tension in its already-strained relationship with China.