U.S. semiconductor suppliers have started to pull their employees from one of China’s top chip firms. The action came after the latest U.S. restrictions stymied Beijing’s ambition to develop its advanced domestic chip technology.

According to Bloomberg, Applied Materials, KLA, and Lam Research, this week began withdrawing their staff from Yangtze Memory Technologies Co. (YMTC), the country’s most advanced memory chips producer. 

Dutch firm ASML Holding NV, a top semiconductor-manufacturing equipment provider, instructed its American workers in the U.S. to stop providing services to China’s customers.

It is a common practice for chip-making companies to send their employees to customers’ facilities to help them fine-tune the manufacturing processes.

The U.S. last week unveiled export restrictions that prohibit Chinese firms from importing cutting-edge chip-making equipment or hiring American citizens without a license. 

Yangtze Memory was placed on the unverified list by the U.S. Commerce Department, along with 30 other Chinese companies. Those firms on the list will be restricted from buying U.S. technology.

The Financial Times reported that last month, top U.S. lawmakers warned the tech giant Apple against using memory chips from Yangtze Memory, saying, “Apple is playing with fire.” 

The U.S. restrictions sent a shock wave through the global chip industry. The Philadelphia Stock Exchange Semiconductor Index has dropped 12% since the limits were unveiled. The index is down over 44% so far this year.

Bloomberg cited a Bank of America analyst’s note, saying, “The U.S. government’s recent restrictions are serious and escalate the economic (and potentially geopolitical) conflict with China.”

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