Biden clamps down on trade to 31 Chinese companies, universities

The Biden administration added chipmaker YMTC Yangtze Memory Technologies and 30 other Chinese companies or institutions to an “unverified” trade list because the US could not conduct inspections to verify they can be responsible in handling sensitive tech exports.

The rule issued by the US Commerce Department on Friday means US export companies must conduct more due diligence before sending goods to the companies on the list, which may require applications for more licenses.

Being on the unverified list is potentially a step toward a trade blacklisting.

YMTC was founded in 2016 and makes NAND memory.

In addition to the 31 companies added to the unverified list, the US removed nine companies from the list, including Wuxi Biologics, which makes ingredients for AstraZeneca’s Covid-19 vaccine.

Commerce’s Bureau of Industry and Security made the unverified list changes in a 20-page rule issued Friday. In addition to companies, the list of 31 entities on the unverified list includes Shanghai Tech University, University of Chinese Academy of Sciences, and University of Shanghai for Science and Technology.

The full impact of the rule was still being weighed by US-based chipmakers, as represented by the Semiconductor Industry Association. “We are assessing the impact of the new export controls on the US semiconductor industry and working with our member companies and the US government to ensure compliance,” SIA said in a statement. “We understand the goal of ensuring national security and urge the US government to implement the rules in a targeted way—and in collaboration with international partners—to help level the playing field and mitigate unintended harm to US innovation.”

Nvidia said it did not expect a material impact on its business from the new rule. 

The Commerce Department bureau said in its latest rule it has not been able to determine compliance with Export Administration Regulations, creating a “significant risk” an entity may become or already is involved “in activities contrary to national security or foreign policy interests of the United States.”

Before the rule was issued Friday, sources told Reuters that the Biden administration was planning to spare SK Hynix and Samsung from the new restrictions on memory makers in China. Neither company appeared on the list of 31 entities.

In a separate action on Friday, President Biden signed an executive order to implement Privacy Shield 2.0, a US-EU data transfer framework to address EU worries over surveillance by US intelligence agencies.

The full executive order is online.