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YMTC Lays Off Workers Due to US Sanctions

Top Chinese memory chip maker YMTC has reportedly laid off up to 10% of its workforce.

YMTC logo
YMTC logo

The move comes less than two months after the company was added to a US trade blacklist. The laid-off workers, representing around 10% of the total, were internally identified as "underperformers" in their 2022 performance review. YMTC did not respond to requests for comment.

Repayment Demand Sparks Controversy

One of the sacked employees wrote on Chinese social media that YMTC asked him to repay over 400,000 yuan for a subsidized apartment he bought in Wuhan. The company had offered the apartment at a discount through its preferential housing policy. Still, it required the employee to repay the price difference because he worked at the company for less than five years. The post generated widespread sympathy from Chinese internet users, as it is rare for an employer to seek repayment from sacked employees. The dismissed employee said the lay-offs affected "almost all departments" and ranged from 5 to 10% of staff.

Impact of US Sanctions

YMTC's latest troubles come as China's top NAND flash chip maker faces tough new US restrictions on the export of leading-edge semiconductor tech to China. The US Commerce Department added YMTC to the trade blacklist that restricts procurement of US products and services without Washington's approval. The US alleges that YMTC provided products to companies already under its export controls, including Huawei Technologies and surveillance camera maker Hangzhou Hikvision Digital Technology.

YMTC Chip factory
YMTC Chip factory

Industry analysts have said it will be difficult for YMTC to continue developing its latest 3D NAND flash technology, Xtacking 3.0, without access to advanced semiconductor manufacturing equipment. The company has not commented on the impact of the US sanctions but may even have to postpone construction of its second wafer fab in Wuhan due to disruptions to its procurement supply chain.

Memory Chip Sales Decline

Global sales of memory chips, which make up a quarter of all semiconductor sales, recorded a 10% year-on-year decline in 2022 amid a "significant collapse in demand," according to market research firm Gartner. Top US memory chip maker Micron Technology also announced in December that it would lay off 10% of its workforce after reporting lower-than-expected earnings for its first fiscal quarter of 2023.