Friday, November 22, 2019
China aims to be making 4% of the world’s memory wafers by the end of next year, reports the Nikkei.
NAND supplier Yangtze Memory expects to triple production to 60,000 wafers a month, or 5% of world production, by the end of next year at its $24 billion plant in Wuhan.
ChangXin Memory expects to quadruple production of DRAM wafers to 40,000 wafers a month, or 3% of the $96 billion world DRAM market, at its $8 billion facility in Hefei by the end of 2020.
At the moment the number of wafers being run in the world for NAND and DRAM is about 1.3 million a month each or a total of 2.6 million memory wafers a month.
There is, of course, no way for outsiders to know in advance how many chips a wafer will produce, so the effect on the world memory market of these Chinese wafers could be either minimal or, if yields are good, could actually represent 4% in IC unit terms.
In value terms, the effect of the wafers on the $56 billion a year NAND market could be less than the impact of the units – Yangtze is making 64-layer NAND while the state-of-the-art is 96, so Yangtze will be selling cheap.
The same applies to ChangXin whose product is 8Gb LPDDR4 DRAM while Samsung has just announced 24Gb LPDDR4 DRAM.
On the domestic market, however, the China government may dictate the price because the government’s aspiration is import substitution.
It will be interesting to see if the main users of NAND -phone manufacturers which compete on world markets – will be prepared to buy trailing-edge NAND just because the government asks them to.
So, is Chinese memory a threat to Samsung, Hynix, Toshiba and Micron?
An exec at Taiwan’s Lite-On Semiconductor told the Nikkei: “China is a real threat because its concept of making profits is different from others.”
Making low-yielding wafers and forcing obsolescent ICs onto domestic users at prices set by the government may turn out to be too expensive a strategy even for China.
Earlier this month, China’s spearhead for its IC efforts – Tsinghua Unigroup – had to deny it had run out of cash.
Meanwhile, Samsung and Hynix have capacity ready and waiting to flood the market if they see Chinese memory ICs becoming a market force and thereby deny China any profits from its memory operations.
And then, of course, are the legal eagles waiting to pounce on patent infringements in Chinese memory chips which will make Chinese memory unsaleable on international markets and give the US government a reason to instruct its equipment companies not to sell to China fabs.
Chinese memory has been threatening to be a big deal for a while now, but it still has a hurdle or two to jump.
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