Four leading makers of chip production equipment have ceased sales of new tools and provide support services of installed tools to China-based Yangtze Memory Technologies Co. (YMTC) due to new export rules that came into effect on Wednesday. To sell new equipment to YMTC and support existing machinery, the toolmakers must get a technology export license from the Department of Commerce’s Bureau of Industry and Security (BIS).
U.S.-based Applied Materials, KLA, and Lam Research have ceased supplying equipment to produce 3D NAND memory with 128-layers or more to YMTC under the latest export rules (opens in new tab) that impose new license requirements for semiconductor production equipment destined for China starting October 12. However, they will continue to supply new equipment and tools to multinational corporations that produce chips in China — Samsung, SK Hynix, and TSMC — for a year without a license. Yet, all export license applications to supply tools to Tsinghua Unigroup-controlled YMTC require review with a presumption of denial. Tsinghua Unigroup is a government-controlled organization.
For the same reason, ASML, which is in the Netherlands, told its U.S. employees to stop ‘servicing, shipping or providing support to any customers in China until further notice,’ according to a Bloomberg (opens in new tab) report.
While Applied, KLA, and Lam Research ship metrology, etching, deposition, inspection, and die sorting tools to Yangtze Memory, ASML sells the Chinese 3D NAND maker crucially important lithographic scanners. While formally, lithography tools used by YMTC are not as advanced as tools used by logic or dynamic random access memory (DRAM) producers and theoretically should not fall under the new licensing requirements, ASML prefers to assess the new export rules and ensure that it complies with the new regulations.
YMTC attempted to procure all equipment and spare parts it could from its American partners in China in the recent weeks and days to keep producing 3D NAND without disruptions to meet the demands of its clients, which reportedly include Apple (opens in new tab). While it probably acquired all manufacturing equipment and spare parts it could (although nobody has confirmed or denied this), its main challenge now is to install and deploy new tools and parts. The new export restrictions imposed by the U.S. government also include services. As a result, ASML, Applied Materials, KLA, and Lam Research employees cannot assist YMTC, as well as other Chinese chipmakers, which means that they cannot install new tools or replace faulty components.
Whether YMTC’s engineers at its fab are qualified to service equipment produced by companies from the U.S. and the Netherlands is unknown. However, for now, the 3D NAND bit supply from YMTC is secure, according to DigiTimes (opens in new tab).
Meanwhile, if YMTC’s employees cannot deploy new tools and fix production tools, sooner or later, YMTC will have to scale down or even cease production of 3D NAND memory. The latter is unlikely to happen as the company will struggle to survive. Still, without support from toolmakers, it will get much harder to maintain YMTC’s production facilities.
It is noteworthy that YMTC was getting ready to ramp up its next-generation family of six-plane 3D NAND chips featuring the company’s Xtacking 3.0 architecture with ~200 layers and a 2400 MT/s interface speed. These chips could eventually enable some of the best SSDs, but we are not sure whether YMTC will be able to get the right tools to produce such memory devices.
