China's Yangtze Memory Technology (YMTC) plans to start volume production of 64-layer 3D NAND flash memory chips in the fourth quarter of this year, according to DigiTimes, an IT industry daily published in Taiwan.
This is bad news for Korean NAND producers because NAND prices have already dropped to the break-even point (BEP). As YMTC is supported by China’s state-owned enterprise Tsinghua Unigroup, it is likely that its NAND chips take up a sizable portion of the Chinese mid- to low-end smartphone market.
According to the DigiTimes report, YMTC is expected to kick off risk production of 64-layer 3D NAND flash chips as early as the third quarter of 2019 and enter volume production of the chips by the end of this year. The report added that YMTC’s production yield rate has seen significant improvement and is satisfactory enough to power consumer electronics products. YMTC plans to move directly to the 128-layer generation with volume production scheduled for 2020.
YMTC has only released a prototype of 32-layer NAND chips to date. The company has sought to start volume production of 64-layer NAND chips since last year but has failed due to pressure from the United States and the downturn of the memory market. However, its recent plan has attracted attention because it includes detailed discussions on product sales rights.
If YMTC starts volume production within this year as reported, it will inevitably impact NAND prices. The price of 128 Gb chips fell to US$3.98 per unit last month from US$5.78 in August 2017. This led to a sharp drop in Samsung Electronics' first quarter profits, and the company is expected to post a deficit in this second quarter. In order to prevent a further price decline, SK Hynix and Micron Technology announced a 10 percent and 5 percent output reduction, respectively.
Another big problem is that YMTC’s NAND products may dominate the low-end Chinese smartphone and PC storage markets. According to DigiTimes, YMTC has been in talks with parent company Tsinghua Unigroup about obtaining the right to sell and market storage devices employing its chips.
Chinese DRAM makers have recently narrowed their technology gap with industry leaders. Innotron and Fujian Jinhua recently launched 25-nanometer prototype and 32-nanometer prototype, respectively, for mobile phones.