US lawmaker calls for action against Chinese chip firm CXMT after Micron

WASHINGTON, May 23 (Reuters) – The U.S. Commerce Department should place trade restrictions on Chinese memory chip maker Changxin Memory Technologies ( CXMT ) after Beijing earlier this week banned the sale of some chips by U.S.-based Micron Technology Inc ( MU.O ), it said the chairman of the US House of Representatives Committee on China on Tuesday.

The restrictions by China’s cyberspace regulator against Micron are the latest in a growing trade dispute between the world’s two largest economies. The move from China sparked tough language from key lawmakers and the White House.

White House press secretary Karine Jean-Pierre told reporters on Tuesday that the Chinese announcement about Micron was “not based on facts.”

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

Senate Majority Leader Chuck Schumer, the top Senate Democrat, also said Tuesday that he is talking to the broader business community and allies about the issue.

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 spokesperson for the Department of Commerce declined to comment.

Representative Mike Gallagher, an influential lawmaker whose select committee on China has pushed the Biden administration to take a tougher stance on China, is the only lawmaker so far to call for retaliation.

The United States “must make clear to China (the People’s Republic of China) that it will not tolerate economic coercion against its companies or its 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, goes to CXMT, YMTC or other PRC firms operating in this industry.”

CXMT is China’s leading maker of DRAM memory chips and the domestic competitor most likely to benefit if Micron is barred from China’s massive chip market.

YMTC, or Yangtze Memory Technologies Corp, is a Chinese chip manufacturer listed on the December 2022 device list.

Gallagher also said the Commerce Department must ensure that “no US export licenses granted to foreign semiconductor memory companies operating in (China) are used to fill Micron, and our South Korean allies, who have experienced exactly this type of CCP (Chinese Communist Party) economic coercion firsthand in recent years , should likewise work to prevent backfilling,” Gallagher said.

Korea’s Samsung Electronics Co Ltd ( 005930.KS ) and SK Hynix ( 000660.KS ), both of which operate memory chip factories in China, and other non-Chinese firms were spared the bulk of U.S. export controls on chip-making equipment imposed in October, but they operate subject to exceptions to the US rules that may expire or be repealed.

Samsung and SK Hynix did not immediately return requests for comment.

Analysts believe 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. makers of chip-making equipment said they received a clarification from U.S. export control authorities that will allow them to ship more tools to China than first thought.

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

The clarification from the Ministry of Commerce was about how memory chip functions are measured for the purpose of applying export control rules.

How such chips are measured can vary with 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 the makers and buyers of memory chips, “there tends to be this big debate,” Hutcheson said.

Reporting by Chris Sanders and Rami Ayyub Editing by Chris Reese

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