Ding Wenwu, vice chairman of Changjiang Storage, a major memory chipmaker in China, on Thursday confirmed his company was in talks with U.S. titan Micron Technology to license important storage technologies used in electronic devices.

"We are in talks with Micron for possible licensing for its NAND flash as well as DRAM technology, but have yet to reach a conclusion," Ding told the Nikkei Asian Review on the sidelines of a semiconductor forum in the Chinese city of Hefei in Anhui Province, a major chipmaking hub. NAND flash and dynamic random access memory, or DRAM, are memory chips used in electronic devices.

"We expect the talks can be finalized and some alliance can be reached by next year," said Ding, adding that the discussions were not limited to licensing technology but also around other possibilities including the formation of joint ventures and investing in each other's shares.

The Beijing-backed company has also approached Toshiba of Japan, and South Korea's Samsung Electronics and SK Hynix to form alliances for the development of memory chips, according to Ding.

Ding is also the president of China Integrated Circuit Industry Investment Fund, a government-led financing program aimed at developing the sector. The fund started up with just $138.72 billion yuan ($20.1 billion), but that figure is expected to bloat to $1.2 trillion yuan over a decade as local governments and private investors plow in money too.

China's relentless push to establish a strong chip sector is driven by its desire to become self-reliant and to reduce its dependence on foreign tech products that have been dominated by Intel and Qualcomm of the U.S., Samsung Electronics, and MediaTek of Taiwan. Chips, which are essentially the brains in electronic devices, also are seen as key to China's national security.

Changjiang Storage was formed in July by Beijing-backed chip conglomerate Tsinghua Unigroup under the direction of the government. The company has high-profile shareholders including Integrated Circuit Industry Investment Fund and an investment vehicle of China's Hubei Province.

"We still have a long way to go in order to make a dent in the global memory chip production," said Tsinghua's Chairman Zhao Weiguo in an email to NAR in August. "In the next five years, we plan to invest $24 billion in Changjiang Storage mainly to develop our own memory chip facilities."

Micron is the most likely partner for China's Changjiang Storage, an industry source familiar with the matter told NAR.

Micron is currently the world's No.4 NAND flash memory chipmaker, with a global market share of more than 10%, trailing Samsung, Toshiba, and Western Digital of the U.S., according to research company TrendForce based in Taipei. It is also the world's third largest DRAM maker, controlling 19% of global output, after Samsung and SK Hynix.

China's foray into memory chip production will have an impact on its potential rivals from Japan, South Korea and the U.S. Industry executives and analysts warn that a Beijing-backed powerful newcomer to the field could eventually tip the supply-demand balance and hit the NAND flash memory businesses of the Toshiba-Western Digital alliance or Samsung.

By: DocMemory
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