Chip Restrictions Spare Chinese Firm Due to Japanese Pressure

Chip Restrictions Spare Chinese Firm Due to Japanese Pressure

The United States has exempted China’s leading producer of dynamic random-access memory (DRAM) from its latest chip export restrictions due to opposition from Japan. Sources reveal that the absence of ChangXin Memory Technologies (CXMT) on the blacklist was influenced by the presence of Tokyo Electron, Japan’s premier chipmaking tool manufacturer, as a major supplier to the Chinese firm. The US Commerce Department’s Bureau of Industry and Security recently imposed an export ban on China covering 24 types of chipmaking equipment and three categories of semiconductor development software. Additionally, 140 Chinese companies were added to the Entity List, restricting their access to US technologies without Washington’s approval. However, notable omissions from the list included CXMT and other major Chinese semiconductor companies.

Japan’s Role in Exempting CXMT

Japan’s influence played a significant role in deterring the US from including CXMT on the latest chip export curbs. Bloomberg reported that the US had initially considered placing CXMT and 11 Huawei Technologies suppliers on the list. However, CXMT’s absence reflects the pressure faced by Washington from its allies to restrain its sweeping sanctions against Chinese companies, which are significant customers for foreign chip equipment.

Tokyo Electron’s Importance to CXMT

Japan and the Netherlands, renowned for their advanced chipmaking equipment, were exempted from the latest updates to the US Foreign Direct Product Rule. This means that sanctioned Chinese companies can still procure some chip tools from these countries. Tokyo Electron, despite Japan’s existing export restrictions on chip-related equipment to “unfriendly markets,” remains a crucial supplier to Chinese semiconductor foundries. Hiroshi Kawamoto, senior vice-president of Tokyo Electron, disclosed that revenue from China accounted for 45% of the company’s total sales in the first half of its current financial year. The company’s chip equipment revenue from mainland China has consistently surpassed Taiwan, the US, Japan, Europe, and South Korea for the past three consecutive financial years.

China’s Ambitions and CXMT’s Significance

China aspires to compete with global counterparts in DRAM, which is extensively used in smartphones, laptops, servers, and high-bandwidth memory (HBM) chips. These chips are critical components in artificial intelligence (AI) processors. Hefei-based CXMT is pivotal to this endeavor, having commenced production in its new Beijing facility. While trailing behind Micron (US), Samsung Electronics (South Korea), and SK Hynix (South Korea), state-backed CXMT has gained attention for its growing domestic market share. Last year, the company introduced China’s first LPDDR5 DRAM chips, validated by domestic smartphone manufacturers such as Xiaomi and Transsion Holdings.

Impact on China’s Access to Advanced Memory Chips

Despite the US concession on CXMT, the latest export curbs have a significant impact on mainland China’s access to advanced memory chips. The restrictions cover all current HBM products and extend to etching tools used in the production of through-silicon via (TSV) technologies, which are essential for HBM production. These measures are anticipated to impede China’s development of HBM and AI capabilities.