Chinese YMTC Receives $1.9 Billion in Govt Funds to Survive US Sanctions

Chinese authorities are investing $1.9 billion in the country’s largest memory chip maker, Yangtze Memory Technologies Co. (YMTC), writes Bloomberg. This deal will mark the resumption of public money inflows into an industry hit by US sanctions.

Image source: ymtc.com

A 12.9 billion yuan ($1.87 billion) injection into YMTC by China’s National Integrated Circuit Industry Investment Fund, also known as the “Big Fund,” was scheduled to close on Jan. 31, according to the Tianyancha enterprise information base . The scale of the investment suggests that Beijing has decided to increase spending on the semiconductor industry, which is desperate to resist US sanctions imposed on China’s tech sector to stem the slump in global demand. And it will be the fund’s largest industry investment in recent months.

Chinese authorities, frustrated by the lack of tangible progress in developing the country’s semiconductor industry, launched a full-scale anti-corruption campaign last year that led to the arrests of several high-level figures linked to the Big Fund. Now the country’s economy is gradually recovering and the strain on public finances weakened by the pandemic is easing. YMTC is one of the few Chinese players that can compete with world market leaders such as Samsung Electronics and SK hynix – the company supplies memory chips for systems of all classes from smartphones to servers in the data center. Last year, YMTC was blacklisted by the US Department of Commerce.

The Big Fund has become Beijing’s main vehicle for supporting the country’s semiconductor industry. Founded in 2014, the organization has since raised around $45 billion in capital and backed a variety of local players, including giants SMIC and YMTC. The fund operated without disclosure mechanisms, which created scope for financial fraud. After last year’s anti-corruption probes, the fund’s scope of activities has diminished, but with the introduction of US sanctions, the need for this has become particularly acute.

YMTC has recently been forced to expand its scope to include “technology transformation” – mechanisms for technology transfer to other organizations. The investment from the Big Fund will help the company weather both U.S. sanctions and a broader industry downturn that has pushed memory prices down.