China’s YMTC asks core US staff to leave due to chip export controls

Chinese chipmaker Yangtze Memory Technologies Corp has asked American employees in key technology positions to leave the company as it rushes to comply with new US export controls disrupting the country’s chip industry.

Four people close to the company said it was unclear how many US citizens and green card holders would be forced to leave YMTC, but that several in China had already left the memory chipmaker.

A senior YMTC engineer said some of the Americans are key to the company’s breakthroughs in NAND memory chip production. “But there is no other way [them leaving]’ the person added.

The departures come as chip companies in China, the US and Europe rush to ensure they comply with tough export restrictions announced by Washington this month.

Leading US chip makers Lam Research, Applied Materials and KLA Corporation have suspended sales and services to semiconductor manufacturers in China. The Netherlands-based ASML has told its US staff to stop serving all Chinese customers while it reviews sanctions.

The new rules require any US citizen or entity to obtain a permit from the Commerce Department to support manufacturing plants or factories, upending an important pipeline of talent for China’s chip industry that draws in part on the expertise of American engineers and scientist relies to advance his technique. This includes hundreds of ethnic Chinese who were educated and educated in the US before returning to their country of birth.

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Longtime YMTC chief executive Simon Yang, a US passport holder, resigned from his post shortly before the sanctions were announced, a move two people said was prompted by mounting Washington pressure on the company.

Yang transformed YMTC into China’s top memory chip maker with Rmb220 billion ($30 billion) in support, mostly funded by the government. The company was poised to secure a spot for its semiconductors in Apple’s iPhone this summer, until political pressure and new US sanctions clouded its prospects.

Three YMTC employees say Yang transitioned from chief role to vice chairman of the company at the end of September. The recent US restrictions leave his status at the company unclear, the people said. Chinese company records show that Yang is staying with YMTC for now.

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Yang and YMTC did not respond to requests for comment.

A person briefed on the turmoil at YMTC said Washington’s export controls left the company with no choice. “The requirement to fire the employees is necessary for the company and also the right step for the personal risk of the employees,” said the person.

Lawyers say the US Department of Commerce is unlikely to issue licenses to circumvent the rules.

“You either give up your citizenship or quit your job,” said a Chinese semiconductor executive.

Another Chinese executive at a state-backed chipmaker based in Shanghai said the company is negotiating the exit of several Americans who are unwilling to give up their US passports.

“For now, we have asked our US staff to work from home until everyone’s situation is resolved,” the person said, noting that they had also withdrawn a job offer to an American passport holder.

“Now we’re not only trying to build ‘US-free’ production lines, but also to de-Americanize the teams,” said the managing director.

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Industry headhunters said the rules would reduce the available talent pool for Chinese semiconductor companies, which are already struggling to find experienced employees.

The rules “have halved the number of candidates available for senior positions at chipmakers and toolmakers,” said a Shanghai-based headhunter, who asked not to be named.

Corporate records in China show that Americans occupy the top ranks of China’s top semiconductor manufacturers and suppliers. Wayne Dai sits on VeriSilicon. Chonghe Yang leads memory chip designer Montage Technology.

Naturalized US citizen Gerald Yin founded the equipment manufacturer Advanced Micro-Fabrication Equipment (Amec) more than a decade ago. The company, one of China’s biggest hopes to take on California-based Lam Research, has a market cap of Rmb 61 billion (US$8 billion) on the Shanghai Stock Exchange.

US export controls have prompted Amec shareholders to post questions on the company’s website, demanding answers about whether America’s top executives will choose their US passport or China’s semiconductor development.

An Amec representative posted a response last week, declining to respond and saying that Yin and others are “normally performing their duties” for now.

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