China Develops Its Own Memory Chips Industry

24 December, 2017

TrendForce: "The next 3-5 years will be crucial to find out whether China's strategy of developing memory fabrication works will be successful"

YMTC Memory Chip Factory

Photo above: YMTC’s future site in Wuhan Donghu

The memory segment will be a major focus in the Chinese effort to build its own Semiconductor Industry. A new research made by TrendForce reveals that large sum of funds and government-initiated resources, are pushing the development of memory segment, where three major domestic players have emerged, including Fujian Jin Hua Integrated Circuit (JHICC), Innotron Memory, and Tsinghua Unigroup. Today China is heavily relies on imported semiconductor components. The government has decided that semiconductor is a sensitive sector which may have potential applications in national security.

Attempts to acquire technologies from foreign companies met resistance in early stages of the development, including Tsinghua Unigroup’s attempt to make technical cooperation deals with Micron, and China-backed funds’ proposals to acquire U.S.-based chipmakers. But China does not stop: It is now aggressively headhunting for industry talents worldwide, especially from places like  Taiwan, Japan, and Korea. The strategy has changed from seeking intellectual property authorization to domestic R&D, showing the strong determination of China to develop its own domestic memory production capacity.

Focus on Specialty DRAM and mobile DRAM

TrendForce says that from technical perspective, Chinese memory suppliers have been laying the foundation for all DRAM segments except graphic DRAM. JHICC and Innotron are currently the two leading DRAM manufacturers in China. JHICC mainly focuses on specialty DRAM R&D and targets at the market of consumer electronics. Backed by large domestic consumption, JHICC is expected to expand its production capacity. Assisted by government subsidies, JHICC may even affect their business strategies in China, and obtain patents to enter the international market at the end of 2018.

China Semiconductors Memory IndustryWhile JHICC avoids competing with major foreign memory suppliers in mainstream applications, Innotron has been focusing on mobile DRAM, a key product of major foreign memory makers. Mobile DRAM currently accounts for the highest percentage in all memory products, but has high technical barriers for fabrication since it has strict requirements of low power consumption. However, given that Chinese brands have accounted for over 40% of global smartphone shipments, if LPDDR4 enters mass production successfully, Chinese government may partially achieve its goal of lowering its reliance on imported memory products.

YMTC takes the lead in NAND Flash market

As for NAND Flash sector, YMTC (Yangtze Memory Technologies Company), a subsidiary of Tsinghua Unigroup, has taken the lead among Chinese domestic semiconductor enterprises. It focuses on the domestic market in the early stage of development, and will start with low-end products such as memory cards and USB drives. It will not enter the SSD market until its technology advances to 64/96-layer. However, SSD market is highly competitive, so it is not easy for YMTC to gain cost competitiveness without government support. Therefore, to achieve growth, Tsinghua Unigroup is likely to first take advantages of the Chinese large domestic market.

Furthermore, after YMTC was founded, XMC shifts its focus to NOR Flash production. Although the trial manufacturing line of NAND Flash is currently set in XMC, the production of NOR Flash and NAND Flash will be split between the two companies. Today, YMTC is getting close to finish the construction of a new site in Wuhan Donghu New Technology Development Zone.

TrendForce estimates that the next 3-5 years will be crucial to find out whether China’s strategy of developing memory fabrication works will be successful. Local intellectual property is particularly significant. “In order to compete with established global chipmakers, Chinese government and semiconductor manufacturers will need to take advantage of its domestic market, and meanwhile, constantly enhance their product development ability and production capacity.”

More information: Breakdown Analysis of China’s Semiconductor Industry

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