Founded in Wuhan, China, in 2016, with government investment and a goal of reducing the country's dependence on foreign chip manufacturers, the company was formerly a subsidiary of partially state-owned enterprise Tsinghua Unigroup.

[8][9] Xtacking enables YMTC to manufacture the memory and the logic circuits on separate wafers and connect them using plasma activation and thermal annealing.

[17] News agencies reported in January 2022 that YMTC had scrapped its intention to build a second 3D NAND fab announced in 2017, citing serious financial issues at Tsinghua Unigroup, its parent firm.

[30] In February 2023 the company reportedly laid off 10 percent of its workforce, cancelled equipment orders, and delayed plant expansion plans in response to US sanctions and challenging market conditions caused by low demand.

[32] In September 2023 the South China Morning Post reported that YMTC intensified its efforts to substitute US-sourced equipment with domestic alternatives, following a $7 billion capital infusion from state-supported investors.

[37] In February 2024, the U.S. Department of Defense designated YMTC as a "military company" that poses national security risks to the United States, barring it from using U.S.-designed chipmaking equipment and supplying products to the U.S.

Representatives Michael McCaul and Bill Hagerty wrote a letter to the United States Secretary of Commerce arguing that YMTC should be placed on the department's Entity List.

The letter stated that YMTC will assist the Chinese government in using unfair trade tactics to force American competitors out of the memory-chip sector, thereby putting US national security in jeopardy.

Additionally, some YMTC executives previously worked for Semiconductor Manufacturing International Corporation, which was added to the Entity List in December 2020.

[30][48] The James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 also banned the U.S. federal government from buying or using chips from YMTC.