The Yank Ban: The Geordie’s Perspective on the RAM Ruckus
Two emerging Chinese memory companies, YMTC and CXMT, have the potential to alleviate the ongoing shortages and soaring prices, yet US Representatives John Moolenaar (R-MI) and George Whitesides (D-CA) are opposing this. In a letter addressed to Commerce Secretary Howard Lutnick released on Thursday, the lawmakers urged the Trump administration to reinforce limitations on Chinese memory manufacturers, asserting that US companies’ procurement of their chips would compromise Western memory manufacturers and provide support to the People’s Liberation Army.
Pointing Fingers at the Newcomers
Established in 2016, these firms are relatively new entrants into the memory production arena. CXMT manufactures dynamic random access memory (DRAM) utilized in various devices from desktops and laptops to smartphones and servers, while YMTC specializes in NAND flash for storage purposes. Traditionally, the chips from CXMT and YMTC have lagged behind those from American and South Korean memory giants like Micron, SK Hynix, and Samsung. However, due to rising memory prices, numerous major PC manufacturers, including Apple, Dell, and HP, have reportedly started validating the two firms’ memory for their products.
Government-Sponsored Challenges
“US dependence on Chinese memory suppliers will subject Western manufacturers to an influx of state-supported Chinese memory, jeopardizing our memory manufacturing foundation and supply chains,” they asserted. Unlike logical circuits such as CPUs and GPUs, memory is a commodity produced to a standardized specification. While some chipmakers may launch new products more quickly than others, all are ultimately creating the same type of product. This facilitates relatively quick switches between suppliers depending on who offers the most competitive price. Moolenaar and Whitesides argue that China could subsidize memory exports to lower average selling prices to a level that renders US and allied memory production unprofitable.
Tricky Loopholes
“In light of these dangers, we urge you to reject initiatives to ease the sales of Chinese memory chips internationally and further expand current regulations on Chinese memory producers to guarantee they never catch up with their Western equivalents,” the lawmakers stated. While CXMT and YMTC present a straightforward and quick alternative to the current memory suppliers, OEMs encounter obstacles in obtaining the memory. CXMT has been identified by the Department of Defense as a Chinese Military Company on its Section 1260H list, while YMTC is subject to US export restrictions per the Bureau of Industry and Security’s Entity List. Export controls primarily hinder the export of American technologies, such as chipmaking machinery, to listed entities, although they don’t prevent US firms from buying their products.
Nonetheless, this path is questionable enough that the Financial Times reported last month that Apple sought the Trump administration’s approval before interacting with either firm. Moolenaar and Whitesides aim to close what they perceive as a loophole, urging the Trump administration to enact an executive order or regulatory directive forbidding US individuals and US-based entities from acquiring memory components from YMTC, CXMT, or any firm listed on the BIS Entity List or the DoD’s Section 1260H list.
Memory Chaos
“The worldwide memory deficit will likely necessitate a holistic government strategy for resolution. The solution to elevated memory costs is not reliance on subsidized Chinese chips but an expansion of manufacturing capacity, which will reduce costs for US companies and consumers for many years to come rather than just months,” the lawmakers articulated. As we have discussed before, memory producers like Micron, Samsung, and SK Hynix are striving to increase manufacturing capabilities, but the process of constructing new wafer fabrication plants is prolonged, often taking four years or more to achieve volume production. Consequently, memory prices are anticipated to stay elevated until at least 2028.
Pet’s Viewpoint: The RAM Circus
alt=”China’s Memory Ban: Wave Goodbye to RAM Shortage Relief, Pet!”
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