Memory gain

Soon to come with Chinese chips?

The Yangtze is known for its flash floods, but not for floods of flash. That may change if China’s largest semiconductor manufacturer has its way.

Tsinghua Unigroup subsidiary, Yangtze Memory, has begun sampling its first 3D NAND flash memory chips – technology that allows for the storage of faster and denser data.

The efforts appear to be paying dividends after the Nikkei Asian Review reported that the company is in negotiations to supply one of the world’s largest and most prestigious customers: Apple.

Both the domestic and international media have highlighted the significance of the move, as China moves up the semiconductor value chain from being an assembler to a designer of complex components such as memory and logic chips.

According to the Nikkei, a contract would be “a big deal, even if the initial orders are small”. Sohu.com calls it a “significant landmark for China”.

Netizens were harder to impress. “Don’t worry, the US won’t approve it,” said one, referencing the multiple tech-focused deals that have been blocked.

Both Electronics Weekly and the Nikkei both query whether Apple has come under pressure to sign a deal to curry favour in the Chinese market (which made up 20% of its fourth quarter sales). As we reported in WiC357, the Chinese government is determined to reduce its dependence on foreign chip firms and the state has been investing heavily in Tsinghua Unigroup with the aim of creating a national champion.

Some analysts have questioned how advanced Yangtze Memory’s technological capabilities really are. “I don’t see them competing with the major suppliers on technology in the next five to 10 years,” warned Bill McLean at IC Insights in an interview with Electronics Weekly.

Last year Yangtze Memory said it had begun sampling 32-layer stack 3D NAND technology and IC Insights reports that the firm hopes to begin producing 5,000 wafers a month at its new Wuhan foundry this year.

It plans to ramp up output to 300,000 units by 2021 using the new 72-layer stack industry standard.

Charles Kau, once known as Taiwan’s godfather of DRAM, is now global executive vice president at Tsinghua Unigroup and is helping to spearhead 3D NAND development. Last year he told Digitimes that Yangtze Memory could close the technology gap within a couple of years because it will be able to achieve 72-stacks at a time when industry development is slowing.

By 2022 IC Insights forecasts that Chinese companies will have a 16.7% share of overall IC (integrated circuit) production in the country, up from 10.8% in 2012.

Samsung Electronics (38% market share in 2017) was the first to commercialise 3D NAND flash last year and other global players are starting to reach a similar level after delays created by the technical complications of moving from 2D to 3D. Samsung, SK Hynix, Toshiba and Western Digital have all gone down the route of deploying charge trap technology, while Intel and Micron are using floating-gate techniques.

These migration difficulties caused an industry shortage, which has led to price spikes. Apple responded by trying to secure its own supply lines by joining a consortium led by Bain Capital to buy Toshiba’s memory division (which holds a 17% market share).

The Nikkei reports that Yangtze Memory now believes it will be able to meet Apple’s minimum technological requirements by 2020.

But analysts forecast that while 3D NAND flash shortages will continue through 2018, there will be a glut from 2019 onwards as major players including SK Hynix (11% market share), Micron (11%) and Intel (7%) rapidly expand their own capacity.

According to IHS Markit, prices for 3D NAND could plummet from $.031 per gigabyte in 2017 to $0.08 by 2021.

If these predictions prove true Yangtze Memory will be entering territory all too familiar to many Chinese industrial firms: i.e. competing in a sector with overcapacity and slumping margins.

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