Chinese flash memory giant YMTC has increased production, but is still 16 times behind Samsung

China’s flash memory major YMTC now processes 400,000 to 500,000 wafers per year to produce advanced NAND memory, all on domestic wafers. Moreover, previously the Chinese company bought Japanese silicon wafers in large quantities, but its loss as a client became a significant problem for the Japanese Sumco.

Image source: Sumco

Last year, YMTC, with its Xtacking 4.0 3D NAND flash memory architecture, became the first company to achieve a 3D NAND layer count of more than two hundred. The company’s product, the X4-9070, a 232-layer TLC 3D NAND, uses multiple silicon wafers, which increases consumption of these raw materials – YMTC is projected to consume about 500,000 wafers per year. This may seem like a lot, but for comparison, the world leader in NAND, Samsung, is capable of processing up to 2 million wafers per quarter, that is, 16 times more.

Nevertheless, the achievement of YMTC is a huge success for Chinese import substitution, and at the same time a major blow to companies that previously supplied raw materials to Chinese firms. As the resource ComputerBase.de explains, the management of the Japanese company Sumco, one of the largest suppliers of silicon wafers in the world, sent alarming signals two weeks ago when reporting the results of the next fiscal quarter. According to Sumco representatives, the Chinese semiconductor industry is now capable of producing up to 1 million silicon wafers per year, and half of this amount goes to the needs of the Chinese manufacturer of 3D NAND memory, YMTC. Previously, the latter was a client of Sumco, but as sanctions against China intensified, it lost access to foreign raw materials, and therefore switched to purchasing Chinese ones.

The graph of supplies of silicon wafers from the Sumco presentation shows how the volume of product supplies to the world market dropped in 2023, and this dynamics can be explained by the strengthening of US sanctions against China in the fall of 2022, to which Japanese manufacturers were forced to join. The production of 3D NAND memory requires a large number of silicon wafers, since the chips have a multi-layer layout. In the case of the most advanced YMTC products, the number of layers exceeds 230 pieces. The management of the Japanese company is not sure whether demand for Sumco products will be able to recover to previous levels, and therefore next year they are going to think about reducing capital costs and postponing the commissioning of new production lines.

However, there is an area of ​​activity that the anti-Chinese sanctions have not affected. We are talking about the supply of silicon wafers for the production of chips using advanced technological processes with standards from 5 to 2 nm inclusive. In certain market segments, Japanese Sumco and Shin-Etsu Chemical control almost 100% of the silicon wafers market in this area. At the same time, the demand for silicon wafers used in the production of HBM memory will grow. In this area, Sumco expects demand to grow at a CAGR of 36% over the next three years.

Returning to YMTC, I would like to add that although the company uses Chinese-made silicon, it still relies on foreign tools, photoresists and precursors. There are some indications that YMTC is developing its own tools; it is a blueprint for the Chinese semiconductor industry’s broader strategy to advance every step of the semiconductor manufacturing process. Huawei is also developing EUV scanners, and YMTC can help, because it also needs new tools.