Who wants to finish their career in failure? Certainly not Sakamoto Yukio, the 75 year-old memory chip expert from Japan, who has just become chief strategy officer at a business that the Shenzhen government wants to challenge Samsung Electronics.
Earlier this year, a fund linked to the Shenzhen branch of Sasac (the state asset manager) registered a company called SwaySure in a bid to support the national strategy of self-reliance in chipmaking. It hired the Japanese veteran, who promised to “go all out to contribute my power to help SwaySure achieve its strategic goals.”
It has also hired Liu Xiaoqiang, a former executive from Taiwan’s TSMC to be SwaySure’s chief executive.
Sakamoto, whose last gig was as senior vice president of another state-back semiconductor group Tsinghua Unigroup (which was forced into bankruptcy last year), told the Chinese press that he had taken the post because he didn’t want to end his life “a loser”. The senior Japanese tech executive has a long pedigree in memory chips, specifically DRAM. However, Sakamoto’s last major CEO role was running Elpida Memory, which ranked as Japan’s largest corporate bankruptcy when it went bust in 2012.
But the local press think that his decision to join another Chinese firm stems more from his anger at Elpida’s failure and the view that it was a victim of “American hegemony”.
In fact Sakamoto has given the Japanese government some of the blame for the failure, telling the Financial Times that Japan’s chipmaking strategy “was not put together by someone who knows much about semiconductors”. Website Nippon.com agreed, attributing Elpida’s demise to the “lack of a strong, smart, tough industrial policy”.
With more government backing, Elpida might have survived a crisis caused by a strong yen and a competitor (Samsung) determined to grow its market share, even though DRAM prices were falling in the wake of the global financial crisis.
Elpida’s demise signalled a reversal of fortunes from the mid-1970s, when the Japanese government had ploughed billions of yen into the sector. This gave Japanese firms the financial firepower to upgrade to each new iteration in the technology at a time when American competitors were hamstrung by a recession.
Indeed, the policy was so successful that Tokyo came under American pressure to agree a floor price for DRAM chips to prevent the Japanese pushing rivals out of the market by selling semiconductors below the cost of production.
Three firms dominated DRAM sales in 2021, according to IC Insights. Samsung was the clear leader with 44% of sales, followed by SK Hynix on 28% and Micron on 23%. A trio of Taiwanese DRAM producers Nanya Tech, Winbond and PSMC accounted for the remainder of the market. But China’s sole challenger to date has been Hefei ChangXin Storage, spun out of GigaDevice in 2016 by its founder Zhu Yiming. It hopes to double output from 60,000 wafers a month to 120,000 by year-end.
Sakamoto’s new employer SwaySure hopes to build up to production of 140,000 wafers a month. For comparison, Samsung is currently on 550,000, while SK Hynix and Micron produce about 350,000 each. However, a technological leap is required to catch up, not just a surge in output.
Lee Mi-hye, a researcher at South Korea’s Overseas Economic Research Institute (OERI), told Business Korea that there is at least a five-year gap in know-how between China and South Korea. “It’s difficult for China to expand its market share due to wide technological gaps and US sanctions,” she said. “There won’t be a fast change in the DRAM sector, unlike the powershift in the display industry.”
One of ChangXin’s main challenges is that it cannot upgrade the extreme ultraviolet (EUV) machines it needs for the lithographic stage of the production process, for instance. Chinese firms are stuck with the predecessor deep ultraviolet (DUV) technology because Washington won’t let Dutch manufacturer ASML sell its latest machinery to Chinese clients.
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