China's Largest Memory Chip Maker Forced To Raise Capital Due To U.S. Blacklists

It appears as though Washington's chip controls on China are starting to make a profound impact.

Last December Washington added Yangtze Memory Technologies Corp. to its trade blacklist and now the company, China's largest memory chip maker, is being forced to raise "billions of dollars" in new capital after burning through $7 billion over the past year, FT has reported. 

The company is also prohibited from procuring U.S. equipment to manufacture its chips, the report says. While Financial Times was unable to confirm the exact amount the company had to raise, they reported it was "equivalent to billions of dollars".

The Wuhan-based YMTC is central to the nation's semiconductor self-sufficiency ambition. Yet, since last fall, U.S. restrictions have limited its access to advanced chip tech. After a $7bn capital boost from backers like China's "Big Fund" last year, the company has rapidly expended funds on equipment and new components.

This led to a new fundraising round, which saw strong domestic investor interest. This support came even before tighter U.S. export controls, indicating a domestic show of unity against U.S. limitations, the report said. 

One government official that's close to the company told Financial Times: "“YMTC is following in Huawei’s footsteps in bringing together the Chinese semiconductor industry to cope with the challenges of US pressure."

“If Chinese companies have equipment that can be used, [YMTC] will use it. If not, it will see if countries other than the US can sell to it. If that doesn’t work, YMTC will develop it together with the supplier,” one investor said.

The company is expected to procure equipment from Chinese suppliers while also using some Japanese, South Korean and European vendors.

YMTC collaborated with Chinese firms Naura and AMEC to enhance etching tech, key to chip layering and cost-effective storage performance, insiders noted. Between January to August, local chipmakers awarded nearly 50% of equipment tenders to Chinese companies, as per a recent Huatai Securities analysis.

But on Chinese chipmaker concluded to FT: “The ones that can be quickly replaced by Chinese equipment are less technically challenging tools. The real challenge is to make the advanced ones.”