By Li Panpan

China's leading memory suppliers YTMC (长江存储)and CXMT (长鑫存储) have achieved their technology breakthroughs and broken the monopoly by international giants for the benefits of both Chinese and global users. More governmental, industrial and social support should be given to the two chips makers in facing off the US containment. This is the key points of an article by JW Insight analyst Wu Shouzhe on December 12.

Following are the excerpts from the article:

Multiple media outlets have said that, due to pressure from the US Department of Commerce, Apple has shelved its original plan to use Chinese supplier Yangtze Memory Technology Corporation (YTMC)'s memory chips in its iPhone products for the Chinese market.

Compared to other IC types, the cyclical fluctuations in the markets of DRAM and NAND Flash, the two chips for consumer electronics, are relatively more severe. Substantial investment and large-scale operations are required at the early stage.

Chinese suppliers have converged rapidly over the past ten years in the DRAM market dominated by Samsung, SK Hynix, and Micron, and the NAND Flash market dominated by Samsung, Kioxia, SK Hynix, Western Digital, and Micron. The big giants jointly occupy more than 90% of the shares in their respective fields; It is hard to break into the technologies and overcome business barriers.

YMTC, based in Wuhan, central China's Hubei Province, did it. In 2017, it released China's first 32-layer 3D NAND, ending the decades-long technological monopoly of international giants. In 2018, it released the industry's first Xtacking technology, achieving a double increase in reading speed and storage density.

The US export controls released in October put those companies' rapid iteration and mass production into question.

Although the US did not immediately announce the results on December 6th and 7th of whether to put YMTC into its UVL list, uncertainties could affect it in further technological breakthroughs, customer verification, and market expansion in the future.

Along with the UVL list, the BIS of the US Department of Commerce imposed new export controls on specific advanced computing semiconductor chips and computer commodities in October. Equipment for 14nm or more minor logic chips, non-planar logic chips including FinFET and Gate All Around, and NAND with 128-layers or more are restricted to further restrict the development of chip design manufacturers in the Chinese mainland to cutting-edge processes.

The deeper reasons why YMTC is targeted can be seen from those control measures. The number of Chinese mainland manufacturers that have entered the Apple'd supply chain has gradually reached 40. Why was YMTC first targeted by the US Department of Commerce?

One of the crucial reasons behind it has the development potential and is the strong driving force of China's memory industry. What the US does is a blatant provocation to the commercialization of global semiconductors, in the excuse of data security. How could China secure its information security and supply chain sustainability and further develop its higher-level AI, memory and computing, and industrial IoT if all the memory chips in mobile phones and PCs are monopolized by Chip4 headed by the US?

The significance of YMTC and CXMT is not only on the technical level but related to the issue of the security of China's entire industrial chain. In a general sense, price increases and supply cuts are commercial behaviors. However, the US is the destroyer of this consensus of commerce, violating the basic business logic.

YMTC adheres to independent innovation and has achieved leapfrog development in just six years. The characteristics of memory semiconductors determine that enterprises must adopt the IDM model to adapt to the trend of combining wiring design and wafer manufacturing technology.

YMTC has formed a complete and orderly market methodology and technology roadmap in introducing equipment and materials, IP import, and customer expansion to build its strength and work through a hard time.

In the field of semiconductor manufacturing, which most needs cooperation in the global industrial chain, the United States has taken the lead in starting reversing globalization, making people in the American industry worry that containment of Chinese semiconductors will eventually hurt the competitiveness of American manufacturers. It will propel Chinese enterprises to increase investment in the research and development of semiconductors.

The procurement costs of YMTC's products are more than 20% lower than world-class suppliers such as Micron, Kioxia, and Samsung, despite certain generational technology differences. More procurement costs because of US export controls will increase the pressure on distributors and finally be paid by US general consumers.

It's advised that the Chinese government give specific protection to leading companies in a particular field, such as YMTC. The national-level and local governments need to support memory enterprises during industry downturns and pressure from the US. Though those companies need to be self-reliant, it is unrealistic and unfair to rely on the strength of enterprises alone to fight against the US. It's also necessary to unite more social forces at home and abroad to support the Chinese memory industry chain.