YMTC denies Pentagon allegations - says it doesn't supply technology for Chinese military use

China's champion 3D NAND producer Yangtze Memory was recently accused by the Pentagon of being a 'military company', potentially posing risks to U.S. national security. In a strongly worded statement passed to Reuters, YMTC said that it does not supply its memory for military use.

"We have not supplied, or been directed by any entity, to supply our technology for military use," a statement by YMTC published by Reuters reads.  

YMTC is among the global 3D NAND technology leaders with its unique Xtacking technology that enables it to offer 3D NAND with range-topping speed data transfer speeds (potentially to enable the best SSDs with a PCIe 5.0 x4 interface). Therefore it is certainly not in YMTC's interests to upset the U.S. government by supplying memory to the People's Republic's Liberation Army. 

Meanwhile, being blacklisted by the U.S. Department of Commerce, and not exactly welcome by customers in Europe or the U.S., YMTC must be prepared to sell its 3D NAND memory exclusively to buyers in China. Some of those buyers are makers of SSDs, PCs, and smartphones and this is where Yangtze Memory can at least partly control the destiny of its 3D NAND devices.  

But YMTC produces loads of memory, so it has to sell an 'unused' volume to distributors back in China, which is where the company loses control over the final use of its memory chips. That said, calling YMTC directly responsible for where its memory devices end up may be a little bit of an over-reach. Meanwhile, YMTC owner Tsinghua Unigroup is a partially state-owned company, which is certainly a concern for the U.S. Ministry of Defence.

Recently, the Pentagon added YMTC to its list of concerns due to its possible links to the Chinese military. This list seeks to pinpoint companies that could jeopardize U.S. national security by aiding Beijing's military-industrial efforts.

While being on this list does not stop YMTC from operating in the U.S., it does block the company from getting contracts with the Defense Department. Moreover, this designation might prompt tougher actions such as being blacklisted by the U.S. Treasury Department, which would negatively impact their business activities in America. Yet again, YMTC hardly has any significant business activities in the U.S.  

Nonetheless, the inclusion into the list makes the life of the company harder, which is why it decided to make a statement claiming that it is not linked to the People's Republic's military activities.