Why China Is Reportedly Investing $1.9 Billion in Chipmaker YMTC

China is pumping $1.9 billion into its top memory chipmaker, according to media reports, as US restrictions on semiconductor exports threaten Beijing’s tech ambitions. Semiconductor manufacturer Yangtze Memory Technologies Co (YMTC) is set to receive 12.9 billion yuan from the state-owned National Integrated Circuit Industry Investment Fund, Bloomberg reported on Thursday, citing government data.

The move comes after the US Commerce Department in December added YMTC to its so-called “Entity List”, blocking the firm along with dozens of other Chinese companies from purchasing US chip technology.

Washington has in recent months tightened restrictions on Chinese chipmakers, citing national security concerns and the ability for the technology to be used by China’s defence sector.

According to US rules released last week, chipmakers benefitting from a $39 billion government fund must agree not to expand capacity in “countries of concern”, including China, for a decade. 

To no longer rely on foreign imports for its chips, Beijing has sunk billions of dollars into building up its own semiconductor industry over the past decade.

And in December, it filed a dispute with the World Trade Organization over US chip export restrictions, accusing Washington of protectionism and violating international trade rules.

State-controlled Chinese business news outlet Jiemian on Thursday said the investment from the national fund was part of a capital infusion that also included two companies backed by the government of Hubei province, where YMTC is based.