China Memory Chip Maker YMTC Sues Tech Consultancy For Libel

Chinese memory chip maker Yangtze Memory Technologies Corp (YMTC) has sued a Danish consulting firm and one of its senior executives for libel in Northern California federal court, as hostilities between China and the West put increasing pressures on Chinese tech firms.

YMTC, based in Wuhan, sued Copenhagen-based Strand Consult and executive vice-president Roslyn Layton in the Northern District Court of California in early June over what it said were several false reports that damaged its market reputation and business relations, the South China Morning Post earlier reported.

Strand Consult began publishing “outlandish and demonstrably false statements” about YMTC and its products starting in 2020 in its China Tech Threat publication, the lawsuit says.

The company cited a 2022 report titled “How Apple’s partnership with Chinese military chip maker YMTC threatens American national security”, co-authored by Layton, in which the firm was called a “Chinese semiconductor maker with known ties to the Chinese military”, reiterating its past assertions that it has no ties to the Chinese military.

‘Spyware’

The report described YMTC’s memory chips as being “equipped with spyware [that] could funnel collected data back to Beijing” and “exfiltrate data”, which would mean “compromising iPhone users’ security and privacy”.

YMTC called this “pure fiction” since memory devices do not have the capability to run malware.

The report was published at a time when Apple was considering using YMTC’s memory chips in some iPhones, a plan it abandoned soon afterward under intense political pressure.

YMTC was later placed on a US trade blacklist in December 2022.

“The falsehoods through China Tech Threat have caused irreversible harm to YMTC’s reputation and business relationships,” YMTC said in a court filing.

‘Healthy competition’

“YMTC advocates for healthy competition to drive innovation and strongly stands against these kinds of anti-competitive practices. We look forward to setting the record straight,” the company told the Post.

In November the Chinese firm sued US memory chip maker Micron, alleging it infringed eight YMTC patents in a bid to protect its market share.

It said Micron, the US’ largest and only remaining memory maker, was “freeriding” on eight of YMTC’s patented inventions.

YMTC cut about 10 percent of staff early last year as a result of US sanctions, but has since seen an upsurge in demand from domestic firms, including government projects, which are prioritising it over foreign competitors such as Micron or South Korea’s SK Hynix or Samsung Electronics amidst spiking demand for artificial intelligence (AI) infrastructure.