Chinese state-backed semiconductor conglomerate Tsinghua Unigroup said it has formed a new business unit for producing DRAM, a type of memory chip dominated by companies in South Korea and the United States.

The move, announced in a one-sentence statement on Sunday, comes as Beijing tries to boost the country’s chip industry, and specifically its DRAM sector, amid an ongoing spat over trade and technology with Washington that has underscored China’s reliance on key imported components.

DRAM, or dynamic random access memory, has proven especially difficult for Chinese companies to produce at scale. U.S.-based Micron Technology Inc and South Korea’s Samsung Electronics Co Ltd and SK Hynix Inc together account for over 95% of global DRAM market share.

It is not clear how the new unit will affect operations at the conglomerate’s Unigroup Guoxin Microelectronics Co Ltd unit, which had already set out to make DRAM. Unigroup Guoxin said in its 2018 annual report it has yet to mass produce LPDDR4 DRAM, the industry standard in most mobile phones.

Tsinghua Unigroup did not answer emailed queries about the new business unit.

Another Chinese DRAM aspirant, Fujian Jinhua, had yet to reach mass production for its chips when the U.S. government in October placed it on an entity list that effectively barred American companies from supplying it with goods and services.

Ken Kuo, vice president of research at TrendForce in Taipei, said in a note that the establishment of the new chip unit is likely to stem in part from the Fujian Jinhua blacklisting.

“Especially after the trade clash between the U.S. and China, how to make products that are compatible and competitive internationally remains a critical issue for China,” he wrote.

The U.S. Department of Justice charged Fujian Jinhua last year with stealing trade secrets from Micron. Fujian Jinhua denied the charges. The ban, nevertheless, has forestalled the company’s production plans.

In 2017, Tsinghua Unigroup announced plans for a $30 billion plant in Nanjing to make NAND and DRAM chips. The facility remains under construction.

Under a push known as “Made in China 2025”, Beijing has targeted high-tech sectors, including semiconductors, for support in a bid to be more self-reliant, an initiative it has backed off from publicly after provoking the ire of the United States, which complains about Chinese industrial subsidies.

According to the China Semiconductor Industry Association, China imported approximately $260 billion worth of semiconductors in 2017, exceeding the value of crude oil imports. Locally-made chips met less than 20% of domestic demand the same year.

Beijing’s efforts to narrow the technology gap are widely expected to intensify as U.S.-China relations sour.

A component sales ban that the U.S. Commerce Department imposed on Shenzhen-based phonemaker Huawei Technologies Co Ltd[HWT.UL] in May threatened to derail the company’s future, as it remains highly dependent on U.S.-made hardware and software.

Over the weekend, President Donald Trump suggested the ban would be eased when he said U.S. companies could continue to sell to Huawei, as long as the transactions pose no “great, national emergency problem”.

By: DocMemory
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