China’s Yangtze Memory takes on rivals with new chip plant

Chinese memory chip maker Yangtze Memory Technologies plans to open a second plant in its hometown of Wuhan as early as later this year, sources familiar with the matter say, to further bridge the company’s technology and manufacturing gap with world leaders like South Korea’s Samsung and Micron Technology from the USA.

The company, also known as YMTC, needs to expand production after a growth spurt that has put it on the world’s semiconductor map and scored notable success in Beijing’s bid to reduce China’s reliance on imported chips.

The original facility was nearing capacity, producing 100,000 wafers a month by the end of 2021, two people told Nikkei Asia.

According to analyst and industry estimates, YMTC held a global market share of almost 5 percent last year. It is the world’s sixth largest NAND flash memory manufacturer behind Samsung, SK Hynix, Kioxia, Western Digital and Micron, and the only one from China.

About 40 percent of its output is currently 128-layer 3D Nand Flash memory, the most advanced yet produced by a Chinese chipmaker. But that’s a generation or two behind world leaders Samsung, SK Hynix and Micron. The rest of the YMTC output is legacy 64-layer 3D Nand Flash memory.

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The new plant would initially build primarily 128-layer flash memory and could later move to even more innovative chips such as 196-layer or 232-layer 3D Nand Flash memory, assuming development proceeds in 2023 and 2023 2024 smoothly.

Apple has been testing YMTC’s flash memory products since last year and could place its first “limited quantity” order as early as this year, two people familiar with the matter told Nikkei Asia. The US tech giant has been in talks with the Chinese chipmaker since 2018 in hopes of finding a low-cost source for memory components.

Achieving a deal with Apple would be a milestone that underscores the quality of Yangtze Memory’s chips, industry leaders say. According to an analysis by Nikkei Asia, Apple’s Chinese suppliers, including those from Hong Kong, already outnumber those from Taiwan, making China the largest source of suppliers for the US company. Apple also has close ties with several Chinese electronics manufacturers, including Luxshare, Goertek and BYD.

Yangtze Memory’s success is also seen as a victory for China as the world’s second-largest economy strives to localize semiconductor manufacturing and build industry champions. Yangtze Memory is backed by the China Integrated Circuit Industry Investment Fund, Beijing’s top chip investment vehicle. And YMTC is optimistic about its growth prospects, having increased its investment budget from $24 billion in 2016 to the equivalent of $32.8 billion this year.

The Chinese chipmaker is currently installing equipment in the new chip factory, an important step before it goes into production. The factory will eventually double the capacity of the first, said several people briefed on the matter. The total capacity of the two fabs will reach 300,000 wafers per month and could help YMTC expand its market share to more than 10 percent worldwide.

The company is split into two parallel teams consisting of hundreds of top engineers tasked with developing 196-layer and 232-layer flash memory, one of the people said. The aim is to catch up with foreign rivals.

The most advanced products on the market that Samsung, Micron and SK Hynix have successfully produced are 176-layer 3D Nand Flash memory chips. They are now trying to make chips that consist of more than 200 layers. Kioxia and Western Digital announced they will be manufacturing 162-layer 3D Nand Flash memory by the end of the year.

The more layers a flash memory chip has, the more advanced the chips are — and the more difficult they are to design and manufacture commercially. Nand flash memory is a key storage component used in all types of electronic devices, from smartphones and PCs to data center servers and connected cars.

Most YMTC flash memory is currently used to manufacture consumer solid-state drives (SSDs), mainly for the Chinese market. Its customers include the leading storage manufacturers Lenovo, Longsys and Kimtigo from China as well as Adata from Taiwan. YMTC has also launched its own brand, ZhiTai, to sell SSDs directly to consumers.

Its share of the global flash memory market has been rising rapidly from 1.3 percent in 2019 when it first put 64-layer NAND flash memory into production, according to Counterpoint Research, which believes it will be nearly 6 percent by 2023 of the market, up from 4.8 percent in 2021.

Brady Wang, an analyst at Counterpoint, told Nikkei Asia that Yangtze Memory was already working on its technology before the company was officially founded in 2016. It has demonstrated its capabilities and gradually become a viable global player after years of effort, Wang said. It had also more than doubled its payroll in four years to currently about 8,000 employees.

“It hires many engineers and veterans who have Chinese backgrounds but used to work for multinational technology and chip companies,” Wang said. “However, managing one facility is different from managing multiple facilities at scale. It remains to be seen whether [can] Production ramped up successfully.”

Political tensions between the US and China are also increasing uncertainties for Chinese companies like YMTC, Wang said.

Washington has slowed the advance of China’s semiconductor industry by blacklisting the country’s leading chipmaker, Semiconductor Manufacturing International Co, and telecoms equipment giant Huawei to restrict their use of American technology. Yangtze Memory is among the most aggressive companies in developing domestic chip manufacturing equipment, but still maintains good relationships with US and other foreign suppliers to ensure its expansion plans are realized.

YMTC declined to comment on this story.

A version of this article was first published by Nikkei Asia on June 23, 2022. ©2022 Nikkei Inc. All rights reserved.

China’s Yangtze Memory takes on rivals with new chip plant Source link China’s Yangtze Memory takes on rivals with new chip plant

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