U.S. Republican Senator Urges Export Controls on China’s CXMT

A prominent U.S. Republican senator is advocating for the imposition of stringent export controls on China's CXMT, a leading player in the country's memory semiconductor industry. In a letter to Commerce Secretary Howard Lutnick dated November 12, Senator Tom Cotton urged the addition of CXMT to the Entity List maintained by the Commerce Department's Bureau of Industry and Security (BIS).

The senator argued that such a move is crucial to curbing China's semiconductor technology advancements and safeguarding U.S. economic prosperity and military superiority. Companies on the Entity List typically face significant restrictions on exports and reexports of items subject to U.S. export controls, potentially hindering CXMT's access to advanced semiconductor manufacturing equipment and essential technologies.

While CXMT is already listed on the Department of Defense's Section 1260H list, encompassing Chinese military-linked entities, the Entity List designation offers more stringent measures than the current designation. CXMT has been making significant strides in the global DRAM market, rapidly narrowing the gap with industry giants Samsung Electronics, SK hynix, and Micron.

According to Counterpoint Research, the company's share of global DRAM market revenue surged from 4% in Q2 2022 to 10% in Q2 2023, marking a six-percentage-point increase in just one year. The company's aggressive expansion and support from the Chinese government have fueled concerns in Washington, particularly as CXMT seeks to enter the high-bandwidth memory (HBM) market—a crucial component in AI semiconductors.

Currently, HBM production yield for CXMT is only 20% to 30%, indicating substantial challenges in meeting quality standards. Cotton emphasized that CXMT's pursuit of HBM development, despite these obstacles, reflects China's urgency in securing semiconductor supplies and the manufacturing difficulties stemming from limited access to advanced equipment and technology.

He further called for additional actions to cut off CXMT's access to financial and technological resources supporting its supply chain. The push for export controls could also have implications for major global technology companies. Reports suggest that Apple was considering utilizing CXMT memory chips in its iPhones and Macs to address memory semiconductor shortages.

If CXMT is added to the Entity List, Apple's diversification efforts in supply chain could potentially be disrupted. South Korea's semiconductor industry is closely monitoring the situation, as export controls on CXMT could potentially slow the Chinese company's technological progress, possibly benefiting Samsung Electronics and SK hynix.

Kyle Chan, a researcher at the Brookings Institution, noted that the U.S. government views purchases of CXMT products as potentially supporting China's technological development. He also explained that placement on the Entity List would significantly restrict CXMT's ability to conduct business with U.S. companies and access U.S. technology.

However, the proposal remains an individual lawmaker's request, and the U.S. Department of Commerce has not yet made a decision on whether to add CXMT to the Entity List. The outcome of the Trump administration's Commerce Department's decision will be a pivotal factor in shaping the global memory semiconductor market.