Tech war: China’s top memory chip maker YMTC to test the limits of innovation under US restrictions

Chinese chip expert Wei Shaojun said the US has ‘weaponized [chip design] tools and advanced chipmaking tools’, forcing a shift to mature technologies
YMTC may even postpone construction of its second wafer fab in Wuhan due to disruptions to its procurement supply chain, according to a source

A Chinese chip expert praised China’s top NAND flash maker Yangtze Memory Technologies Co (YMTC) for its rival-beating innovation, but cautioned that the country needs to divert its focus to mature technology development after the US imposed sanctions on exports of leading edge semiconductor tech to China.

Since its founding in 2016, Wuhan-based YMTC has been China’s hope for breaking ground in the global market for NAND flash memory chips – a non-volatile semiconductor memory that retains data without power, which is pervasively used in smartphones, tablets and other consumer electronics devices.

However, those hopes have dimmed. In December, the US Commerce Department’s Bureau of Industry and Security put YMTC, along with 35 Chinese entities, on a trade blacklist that restricts procurement of US products and services without Washington’s approval. The US alleges that YMTC has provided products to companies already under its export controls, including Huawei Technologies Co and surveillance camera maker Hangzhou Hikvision Digital Technology Co.

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Foreign chip experts say YMTC’s ability to achieve technology advancement and volume production will be hindered by its lack of free access to US chip-making tools and services, although the company is not expected to collapse immediately.

“It will be very difficult for the memory industry in China to continue to function going forward,” said Nicolas Gaudois, head of Asia Pacific Technology Research at UBS. “Obviously, it is limiting its ability to ramp up new capacity for advanced technologies.”

Wei Shaojun, a semiconductor professor at Tsinghua University and noted industry commentator, said the US has “weaponized [electronic design automation] tools and advanced chip-making tools”, areas where it has an absolute technology advantage, to “curb China’s advanced semiconductor technology development”.

Wei, speaking at a recent industry forum in Shenzhen, said this has forced China to refocus on improving its mature chip-making processes.

He also praised YMTC’s technology innovations, including its Xtacking structure, which was more cost-efficient in the long term.

“Although YMTC’s architecture of binding two wafers together seems more costly, the CMOS Under Array (CUA) … architecture used by most NAND chip makers appears less costly, but when the NAND stacks reach more than 300 layers, the CUA process could result in very low yields as more layers are added”, Wei said last week in Shenzhen.

He added that rival NAND memory chip makers could “learn from YMTC”.

The Xtacking 3.0 architecture represents the latest iteration of YMTC’s home-grown Xtacking structure, which will power its 4th generation of 3D NAND chips. Xtacking 1.0 was first unveiled in 2018, but was superseded by a 2.0 version in September 2019

The company introduced its first 3D NAND chip, the X3-9070 based on the Xtacking 3.0 architecture, in August last year. The 3.0 architecture improved performance by 50 per cent over previous designs, increasing storage density to 1BT while reducing power consumption by 25 per cent, according to a YMTC statement.

Three months later, TechInsights, a Canadian semiconductor and microelectronics intelligence provider, found a YMTC-made 232-layer 3D NAND chip featuring Xtacking 3.0 in a Hikvision solid-state drive, a chip which TechInsights concluded was ahead of the industry’s leading memory makers Samsung Electronics, SK Hynix and Micron Technology.

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While it might be a milestone architecture for 3D NAND technology, YMTC’s inability to do business with top semiconductor equipment makers such as Lam Research – whose tools are important to memory chip makers – will mean its technology prowess is cast into question.

The state-backed, privately-held YMTC has remained quiet about the impact of the US sanctions on its business.

“Without the support of the key equipment providers, YMTC is now facing a huge technical obstacle in the development of its latest 3D NAND Flash technology known as Xtacking 3.0,” said research company TrendForce in a research note. “In particular, raising yield rates for the 128 layer and 232 layer processes is going to be extremely challenging for the Chinese memory manufacturer.”

YMTC may even postpone construction of its second wafer fab in Wuhan due to disruptions to its procurement supply chain, according to an industry source. Another industry expert, a former technician at Huawei, said YMTC was not short of lithography systems as it had bought several before the restrictions were imposed, but the challenge lies in etching tools from suppliers such as Lam Research. These tools are critical for the complex 3D NAND wafer fabrication process, especially as the company vies with competitors to add more layers to increase storage density.

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3D NAND is made up of a number of memory cell layers stacked vertically. As more layers are added, the bit density increases, enabling products with more storage capacity.

Previously, NAND flash memory makers used the two-dimensional architecture known as planar NAND – in which flash memory cells are placed side by side on a transistor die. Manufacturers have strived to fit more cells in less space and in just 15 years, the cell size has shrunk from 120-nanometre to 19-nm with 100 times more capacity, until the scaling hit a technical limit in around 2010.

Samsung achieved a major milestone by shipping the world’s first 3D NAND device in 2013. Since then, the 2D architecture has given way to 3D amid ever-growing data storage demands. Today, mainstream 3D NAND architecture is called CMOS Under Array, or CUA, which US companies Micron and Intel used to introduce their first 3D NAND chips in 2015.

Beside the impact on its production, TrendForce said NAND flash buyers outside China now harbour significant reservations about adopting YMTC’s technology, with Apple and others temporarily halting product sampling with the Chinese firm.

“YMTC will gradually lose its cost competitiveness due to technological stagnation, and the erosion of its market share will continue,” TrendForce said.

To avoid this fate, the company will need to find alternative paths, such as going back to manufacturing 2D NAND flash, or transform into a supplier of logic chips made with mature process technologies, according to TrendForce.