US lawmaker seeks action against Chinese chip company CXMT after Micron

WASHINGTON, May 23 (Reuters) – The U.S. Commerce Department is expected to impose trade restrictions on Chinese memory chip maker Changxin Memory Technologies (CXMT) after Beijing earlier this week banned the sale of certain chips by U.S. firm Micron Technology Inc (MU.O), the chairman of the U.S. House of Representatives China Committee said on Tuesday.

The restrictions imposed by China’s cyberspace regulator on Micron are the latest in a growing trade dispute between the world’s two largest economies. China’s move has drawn harsh language from key lawmakers and the White House.

White House press secretary Karine Jean-Pierre told reporters on Tuesday that China’s Micron announcement was “not based on facts.”

The White House said the Commerce Department was “directly engaged” with China over Micron, a maker of memory chips essential for products ranging from cellphones to data center servers.

Senate Majority Leader Chuck Schumer, the Senate’s top Democrat, also said Tuesday he was discussing the issue with the broader business community and allies.

A spokesperson for the Chinese Embassy in Washington did not immediately respond to a request for comment. A representative for CXMT could not immediately be reached for comment.

A Commerce Department spokesperson declined to comment.

Rep. Mike Gallagher, an influential lawmaker whose China select committee has pressed the Biden administration to take tougher stances on China, is the only lawmaker to date to call for retaliatory action.

The United States “must make it clear to the PRC (People’s Republic of China) that it will not tolerate economic coercion against its companies or allies,” Gallagher said in a statement. “The Commerce Department should immediately add ChangXin Memory Technologies to the Entity List and ensure that no US technology, regardless of specification, is passed to CXMT, YMTC or other PRC companies operating in this sector.”

CXMT is China’s largest DRAM memory chip maker and the domestic competitor most likely to benefit if Micron is shut out of China’s chip market.

YMTC, or Yangtze Memory Technologies Corp, is a Chinese chipmaker listed on the Entity List in December 2022.

Gallagher also said the Commerce Department must ensure that “any U.S. export license granted to foreign semiconductor memory companies operating in (China) is not used to replace Micron, and our South Korean allies , who have experienced exactly this type of CCP (Chinese Communist Party) economic coercion firsthand in recent years, should also act to prevent the landfill,” Gallagher said.

Korean companies Samsung Electronics Co Ltd (005930.KS) and SK Hynix (000660.KS), both of which operate memory chip factories in China, and other non-Chinese companies have been spared US controls at the export on chipmaking equipment imposed in October, but they operate under exemptions from US rules that can expire or be revoked.

Samsung and SK Hynix did not immediately respond to requests for comment.

Analysts estimate that CXMT’s chips are two to three generations behind industry leaders Micron, Samsung and SK Hynix.

Gallagher’s call comes weeks after U.S. chip-making equipment makers said they received a clarification from U.S. export control authorities that will allow them to ship more tools to China than originally planned.

Lam Research Corp (LRCX.O), the leading maker of tools for making memory chips, told investors the clarification could lead to hundreds of millions of dollars in additional sales from China.

Commerce’s clarification related to how characteristics of memory chips are measured for purposes of applying export control rules.

How these chips are measured can vary depending on the tools and materials used to make them and how they are designed, said Dan Hutcheson, vice president of TechInsights Inc, which produces research reports on the semiconductor industry.

Even among memory chip makers and buyers, “it tends to be this big debate,” Hutcheson said.

Reporting by Chris Sanders and Rami Ayyub Editing by Chris Reese

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