In October last year, the U.S. government banned semiconductor equipment export to China to block China’s rise in the semiconductor industry, and then American companies such as Lam Research and KLA-Tencor as well as Applied Materials, the largest player in the industry, stopped doing business with China. Many said that China’s ambition was thwarted in that China, incapable of producing NAND flash chips to say nothing of DRAM chips, would be unable to meet DRAM production yields without semiconductor manufacturing equipment. JHICC, a leading Chinese server DRAM chip supplier, was sued by Micron Technology with regard to process technology and rumors circulated that JHICC would shut down its business.
In the meantime, Tsinghua Unigroup announced on July 2 that it would enter the DRAM industry soon. Experts explained that the new business is part of China’s restructuring in the semiconductor industry. Tsinghua Unigroup is a subsidiary of Tsinghua Holdings, a state-run enterprise that has 14 listed subsidiaries and 2,000 firms along with a total asset of approximately 352.8 billion yuan as of 2017. The leading player in the Chinese semiconductor industry owns YMTC as a NAND flash supplier and is engaged in system-on-chip business as well. Its DRAM business unit establishment means that it is now an enterprise covering every semiconductor industry segment.
“Unigroup Guoxin Microelectronics, which is Tsinghua Unigroup’s subsidiary designing circuits, is good at DRAM product development and, as such, will contribute to the new business,” market research firm DRAMeXchange commented, adding that the company is likely to develop DRAM products on its own in close cooperation with Chinese local governments although its process technology is still underdeveloped. “Tsinghua Unigroup is unlikely to significantly affect global DRAM supply and demand right away, yet it can jolt the industry by growing rapidly with the Chinese government backing,” said an industry insider.
China cannot give up on the semiconductor sector in that its annual semiconductor imports, US$260 billion as of 2017, are huge to the point of exceeding its annual crude oil imports and the sector is essential for its future international hegemony. The Chinese government is still maintaining its plan to boost China's semiconductor self-sufficiency from less than 20 percent to at least 70 percent between this year and 2025. Tsinghua Unigroup has built memory chip manufacturing facilities in Nanjing since 2017 at an investment of US$30 billion. The establishment of the new business unit can be regarded as part of China’s effort for technological independence.
China’s memory chip manufacturing capabilities are still unknown. According to some news outlets, YMTC is expected to come up with 64-layer NAND chips within this year and Innotron produced 25 nm prototypes for mobile use. None of these is concrete and the Chinese government is likely to narrow its technological gap by fully supporting Tsinghua Unigroup.
“China is almost unable to manufacture memory chips in view of the equipment export ban, and yet we need to watch closely with it being said that YMTC is continuing to refine its NAND chip production technology,” said Korea Semiconductor Industry Association managing director Ahn Ki-hyun. “The first test will be whether China can manufacture decent NAND flash memories within this year and DRAM chip manufacturing is something to be considered later,” another industry expert mentioned, adding, “The predominance of Samsung Electronics, SK Hynix and Micron Technology in the DRAM industry is likely to remain intact for the time being.”
Still, not a few experts point out China’s move is nothing to be ignored. Possibilities of Samsung Electronics’ losses are being mentioned in the NAND industry and the prices of DRAM chips have fallen since the beginning of this year. South Korean semiconductor companies’ conditions might be further deteriorated if China manufactured memory chips earlier than predicted.
In fact, they are already concerned over the Japanese government’s recent decision to complicate the export of key semiconductor materials to South Korea. The materials are photoresist, etching gas and high-purity hydrogen fluoride to be specific. South Korean companies import from Japan no less than 43.9 percent of the high-purity hydrogen fluoride they use and the degree of dependence amounts to 91.9 percent when it comes to photoresist.