China firms enter memory sector
WHILE Korea remains peerless in the global memory chip market, industry observers notice that multiple Chinese fabless chipmakers have been showing stellar growth in the last five years, and they are eyeing the memory market as well.
Data from US-based tech research firm Omdia, the average annual revenue growth of the top 10 Chinese chipmakers, including memory integrated circuit (IC) and logic IC developers, stood at 19.6 per cent between 2015 and 2019, outpacing that of South Korea’s 10 biggest chip manufacturers, including Samsung and SK hynix.
HiSilicon Technologies Co Ltd, the largest system-on-chip provider under Huawei Technologies Co Ltd, grew 22.7 per cent during the period, leading China’s efforts to get a leg up in the semiconductor market since the government’s announcement to raise the country’s self-sufficiency rate of chips to 40 per cent by this year and to 70 per cent by 2025.
South Korea’s Samsung and SK hynix recorded 7.9 per cent and 8.6 per cent growth, respectively, as they were confined to the memory market.
In the logic chip sector, it seems like China is taking advantage of economies of scale.
Benefiting from the vast size of its domestic market, it is easier for small fabless firms there to try designing and developing a variety of chips, contributing to a growth in quantity eventually.
The government-led plan to boost the semiconductor industry has given birth to more than a dozen unicorns – start-ups worth over $1 bill i on – t hat devel op a r t i f i c i a l intelligence-based chips, although some are thought to be overvalued.
Among the top 10 Chinese chipmakers by growth rate, just one, GigaDevice Semiconductor (Beijing) Inc, is a memory provider, Omdia data shows. The others provide logic chips, LEDs and sensors.
Some memory chip producers also showed remarkable growth with technological advances.
ChangXin Memory Technologies Inc (CXMT), the first Chinese memory provider, recently made it public that it would start mass producing DRAM on a 17 nanometre (nm) process within the year.
Industry experts speculate that the 17nm DRAM manufacturing technology would be equivalent to the second generation of 17nm DRAM by Samsung, which was commercialised in 2017.
“Although China remains behind Korea in terms of both design and manufacturing technologies, it was noticeable that their memory fabs are filled with the latest equipment and equipped with cutting-edge solutions,” said Yoo Hoi-jun, professor at the electrical engineering department at Korea Advanced Institute of Technology, who had visited the CXMT plant located in Hufei, Anhui province, last year.
Earlier, another Chinese memory firm Yangtze Memory Technologies Co Ltd said it had completed development of 128-layer NAND Flash chips and will start churning them out this year, hinting that the technological gap is narrowing more quickly in the NAND market.
SK hynix aims to roll out the 128layer NAND product in the second quarter of this year.
“Personally, I believe both Korea and China have many of the same market risks,” said Omdia senior analyst Ron Ellwanger.
“While Korea is very dependent on memory, logic markets are vulnerable to the economy and consumer confidence. So, the Chinese players are entering into the memory market. But we can’t discount brand trust and loyalty,” he said.