December 1, 2022

China's YMTC tells essential US employees to leave due to chip export controls

China’s YMTC tells essential US employees to leave due to chip export controls

Chinese chip maker Yangtze Memory Technologies Corp has asked US employees in key technology positions to leave, as it rushes to comply with new US export controls that are disrupting the country’s chip industry.

Four people close to the company said it was unclear how many US citizens and green card holders would be forced to leave the YMTC, but that many in China had already left the memory chip producer.

A senior YMTC engineer said that some Americans were key to the company’s success in producing Nand memory chips. “But there is no other way [them leaving]’ the person added.

The departures come as chip companies in China, the United States and Europe are scrambling to ensure they comply with strict export restrictions unveiled by Washington. This month.

Lamm Research and Applied Materials Inc. and KLA Inc. are the leading chip equipment suppliers in the United States Pending sales and services for semiconductor manufacturers in China. Netherlands-based ASML has asked its US employees to stop serving all Chinese customers while it assesses the sanctions.

The new rules require any US citizen or entity to obtain permission from the Department of Commerce to provide support to manufacturing plants, or fabs, changing a major pipeline of talent for China’s chip industry that depends in part on the expertise of US engineers and scientists to advance. its technology. This includes hundreds of Chinese who were educated and trained in the United States before returning to their home countries.

YMTC’s longtime CEO, Simon Yang, a US passport holder, resigned just before the sanctions were announced, in a move two people said was caused by Washington’s increasing pressure on the company.

Yang turned YMTC into a leading company in China memory chip product Supported by 220 billion renminbi ($30 billion) in funding mainly from the government. The company was on the verge of securing a spot for Apple’s iPhone semiconductors this summer until political pressures and new US sanctions cast a shadow over its prospects.

Three YMTC employees say Yang moved from his main position in late September to become the company’s vice president. The people said the recent US restrictions leave his status at the company unclear. Chinese company records show that Yang is still at the YMTC for the time being.

Yang and YMTC did not respond to requests for comment.

A person familiar with the turmoil at YMTC said Washington’s export controls left the company little choice. “Asking employees to resign is essential to the company and the right action for employees’ personal risks as well,” this person said.

Lawyers say the US Commerce Department is unlikely to grant licenses to break the rules.

“Either you give up your citizenship or you quit your job,” said a Chinese semiconductor executive.

Another Chinese executive at a Shanghai-based chip maker said the company was negotiating the exit of many Americans who were not ready to give up their US passports.

“Currently, we have asked our American employees to work from home until everyone’s status is finalised,” the person said, noting that they had also canceled a job offer for a US passport holder.

“Now we’re not only trying to build ‘US-free’ manufacturing lines but also de-Americanizing the teams,” the executive said.

Industry talent researchers said the rules will reduce the pool of talent available to Chinese semiconductor companies, which are already struggling to find experienced staff.

One headhunter in Shanghai, who asked not to be named, said the rules had “halved the number of candidates available for senior positions in chipmakers and tool makers”.

Corporate records in China show that Americans are at the top of the leading Chinese semiconductor manufacturers and suppliers. Wayne Day sits atop VeriSilicon. Chonghe Yang leads a montage technique for the memory chip designer.

Naturalized American citizen Gerald Yen founded the equipment supplier Advanced Micro-Fabrication Equipment (Amec) more than a decade ago. The company, one of China’s best hopefuls to acquire California-based Lamm Research, has a market capitalization of 61 billion renminbi ($8 billion) on the Shanghai Stock Exchange.

U.S. export controls prompted Amec shareholders to ask questions on a message board on the company’s website to demand answers about whether top U.S. executives would choose their U.S. passports or develop semiconductors in China.

An Amec representative last week posted a response, declining to answer and saying Yin and others were “performing their duties normally” at the moment.