China's NAND Gap Narrows as Growth Continues... How Big Is It?

Apple Includes YMTC NAND in iPhone? US Congress Criticizes "Playing with Fire"
YMTC Seeks Market Share Growth with Government Support and Low-Cost Strategy
China's NAND Technology 2 Years Behind Korea... "Production Volume and Yield Expected to Improve"

SK Hynix 96-layer 512Gbit TLC 4D NAND Flash and Solution Products / Source=SK Hynix

[Asia Economy Reporter Kim Pyeonghwa] In the memory semiconductor sector, China is narrowing the technological gap with South Korea in the relatively less technically demanding NAND flash field. Chinese semiconductor company Yangtze Memory Technologies Co. (YMTC) is expected to supply NAND flash products for some iPhone models as an Apple partner. There are also speculations that China may catch up to a certain extent with domestic technology levels in the future.

US Congress 'Warning' to Apple for Embracing YMTC NAND

According to semiconductor industry sources and foreign media on the 12th, controversy is growing in the US following news that Apple has designated YMTC as a supply partner. Voices of opposition are emerging mainly from the local Congress.

Marco Rubio, Vice Chairman of the US Senate Intelligence Committee, recently warned in an interview with the UK Financial Times (FT), saying, "Apple is playing with fire," and "If Apple advances (its business with YMTC) further, it will face an unprecedented investigation from the federal government."

Michael McCaul, senior member of the US House Foreign Affairs Committee, criticized, "YMTC has ties with the Chinese Communist Party and the military," and "Apple could effectively transfer knowledge and know-how to YMTC that helps the Chinese Communist Party achieve national objectives."

Earlier, semiconductor industry sources reported through foreign media that Apple plans to equip its iPhone series with YMTC's 128-layer NAND flash this year. There were specific forecasts that this NAND could be included in the iPhone 14 series launched this month and the budget model iPhone SE 3rd generation released in May. As the US government is moving to exclude China from the semiconductor industry through discussions like the Chip 4 alliance, Congress has stepped in to curb Apple's unilateral move.

In response to the strong opposition mainly from the US Congress, Apple explained to FT that it has not used YMTC NAND in any products. It stated that it is considering the option of sourcing YMTC NAND for some iPhone models sold in China.

YMTC Aims for Mass Production of 232-Layer 3D NAND Within the Year

The semiconductor industry is paying attention to YMTC being named as an Apple partner. Although Apple explains that YMTC NAND integration may be partial, since Apple is known for being particularly strict in supplier selection and management, this is seen as a case where YMTC's technological capabilities have been recognized.

Industry insiders estimate that YMTC's NAND technology is about two years behind leading domestic semiconductor companies such as Samsung Electronics and SK Hynix. Thanks to the Chinese government's full support to grow the memory semiconductor industry, YMTC is rapidly improving its technology and increasing market share through low-price competition.

A semiconductor industry official said, "Compared to DRAM, NAND technology is relatively less challenging, so China is quickly narrowing the technological gap and trying to stand out," adding, "They claim to have developed NAND technology with over 200 layers recently; whether this is true needs to be verified, but it is expected they will catch up soon." YMTC plans to mass-produce 232-layer 3D NAND within this year.

Lee Joo-wan, a research fellow at POSCO Research Institute, also explained, "Production volume and yield are still insufficient, but these issues will gradually be resolved over time," and "It is difficult to specify an exact timeline, but if production volume increases, it will be possible to expand market share mainly in the Chinese domestic market."

While China's NAND market share expansion is anticipated, US sanctions remain a variable. The US is moving to restrict exports of manufacturing equipment necessary for producing high-performance NAND to China. Although no specific figures have been disclosed, the industry predicts that YMTC's cumulative losses are considerable.

According to Taiwanese market research firm TrendForce, Samsung Electronics leads the global NAND flash market in the second quarter with a 33.0% share. Following are SK Hynix (19.9%), Kioxia (15.6%), Western Digital (13.2%), and Micron (12.6%). YMTC holds a minor 3% market share as of the first quarter (Omdia). The semiconductor industry expects this share to increase to 10% in the future.

This content was produced with the assistance of AI translation services.