December 4, 2023

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China has a plan to separate itself from foreign DRAM chip makers

China has a plan to separate itself from foreign DRAM chip makers

  • The Chinese government has invested $5.4 billion in DRAM chip maker Changxin Xinqiao

  • US sanctions have put the most advanced DRAM and NAND chips out of reach of Chinese integrators

The DRAM and NAND chip market is dominated by South Korean companies Samsung and SK Hynix. Only the American company Micron Technology can keep up with these technologies. According to the advisor StatistaSamsung closed the third quarter of 2022 with Market share 40.7%This puts it within a comfortable distance of SK Hynix, which has 28.8%, and Micron, which has 26.4%. These numbers are unlikely to have changed much in recent months, so they serve as a reference.

The Chinese market is very important for these three companies. Currently, the administrative leadership of Micron’s subsidiary in China is negotiating with the Xi Jinping administration to resume its business activity. At the end of last May, the Cyberspace Administration of China, China’s internet regulator, banned its companies from purchasing its chips from Micron because it suspected it could compromise the security of its networks and vital information linked to the Chinese supply chain. .

This is the government’s official justification, but it is reasonable to accept that this action is primarily part of China’s response to US sanctions. For Samsung and SK Hynix, the Chinese market is just as important as for Micron. In fact, these two companies have Developed plants on Chinese soil Which largely seeks to respond to the Chinese market itself. Samsung produces NAND Flash chips in Xi’an, SK Hynix manufactures DRAM chips in Wuxi and NAND Flash in Dalian.

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China is investing millions in memory chip manufacturers

This coin has another side. Until now, Chinese integrators have largely relied on foreign memory chip manufacturers, and Xi Jinping’s government wants to end this dependency. Sanctions imposed by the United States and its allies prevent Chinese electronic equipment manufacturers from accessing the most advanced memory technologies of the three companies we talked about in the previous paragraphs, which clearly reduces their competitiveness.

The Chinese government has no choice but to take the necessary steps to stop relying on foreign manufacturers of DRAM and NAND chips.

The conflict between Huawei and SK Hynix clearly embodies the current situation. The latter company is investigating how the 176-layer UFS 3.1 NAND Flash and LPDDR5 chips made it into the Mate 60 Pro, Huawei’s new flagship smartphone. It is interesting to research SK Hynix I overlapped With the approval of the US administration, which finally decided that the Kirin 9000S SoC of this Chinese mobile phone was manufactured by SMIC using deep ultraviolet lithography equipment manufactured by the Dutch company ASML.

Under the current circumstances, the Chinese government has no choice but to take the necessary steps to stop relying on foreign manufacturers of DRAM and NAND chips. Otherwise, you risk deteriorating the competitiveness of your electronic equipment integrators. As expected, the administration led by Xi Jinping has already begun. At the beginning of November he invested 2 billion dollars In the memory chip manufacturer Changxin Xinqiao through the Chinese Integrated Circuit Industry.

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However, this was just the first step in a decidedly more ambitious strategy. In fact, this week Bloomberg revealed that the Chinese government’s investment in Changxin Xinqiao is actually much larger: no less than $5.4 billion.

This number is considered sufficient to establish a new advanced semiconductor manufacturing plant, which will certainly seek to reduce Chinese companies’ dependence on foreign memory chip manufacturers. However, the Xi Jinping administration is likely to also invest in CXMT in the short term (Changxin Memory Techniques), another major producer of DRAM chips.

Cover Photo: SK Hynix

more information: Bloomberg

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