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© begemot 30 dreamstime.com Analysis | November 26, 2015

Chinese to play significant role in NAND Flash industry in next 2~3 years

Led by state-backed conglomerate Tsinghua Unigroup, which has accelerated its investments in NAND Flash manufacturers, the Chinese semiconductor sector is set to play a pivotal role in the global NAND Flash industry as it is close to completing this particular industry chain.
Though NAND Flash market is weak in short term due to oversupply, growth in various applications has been very rapid from the long-term perspective, said Sean Yang, assistant vice president of DRAMeXchange, a division of TrendForce. NAND Flash is certain to become the core technology in the development of the storage and memory industries in the near future as the number of consumer electronic products carry SSDs and eMMCs increases. TrendForce expects that the Chinese semiconductor sector will latch on to this trend and gradually establish a substantial presence in the global NAND Flash production in the next two to three years.

Yang added that the Chinese NAND Flash strategy has become more meticulous and is comprised of five major approaches.

1. Expansion of investments in China by major international NAND Flash manufacturers: Among international NAND Flash suppliers, Samsung has made the most progress developing the Chinese market. The company has rapidly gained share in the global SSD market with products carrying 3D-NAND Flash chips made in its Xian fab. With this success, Samsung plans to further raise the capacity of Xian fab and anticipates the production facility to be operating at its fullest capacity by the first phase of expansion next year. Intel too will begin producing 3D-NAND Flash chips in the second half of next year at its Dalian fab, which being converted from a processor fab to a memory fab.

2. Filling of the capability gaps via acquisitions and investments: With the most aggressive record, Tsinghua Unigroup has become a prominent example of the surge in Chinese deal-making in the semiconductor sector. With a majority stake in Western Digital (WD), Tsinghua Unigroup will be able to indirectly take part in the NAND Flash industry from SanDisk’s merger with WD. The Chinese conglomerate also announced a deal to buy 25% of Powertech on October 30. By becoming Powertech’s largest shareholder, Tsinghua Unigroup will obtain crucial technologies and resources for the packaging and testing of memory products.

3. Support for the development of domestic NAND Flash technologies: Major Chinese foundries, Semiconductor Manufacturing International Corporation (SMIC) and XMC, are currently the most proactive among their domestic peers; and their respective technologies, products and strategies are steadily maturing. XMC in particular is poised to create an impact in the NAND Flash industry in the next two to three years as it is working on the advanced 3D-NAND Flash.

4. Integration of NAND Flash controller supply chain: Development of controller chips and firmware will be very important for the Chinese storage industry. These components have to meet the national standard on information security that was clearly established for the industry. The technical capabilities of Chinese controller chip manufacturers have advanced to a certain level with the takeoff of the domestic market and are rapidly gaining international visibility.

5. Acceleration of vertical integration within the industry: A noteworthy example is the strategic partnership between Chinese memory module maker Netcom and Marvell, a major supplier of controller chips. As a fabless IC design house seeking to develop the Chinese SSD market, Marvell will take advantage of Netcom’s complete production chain in Suzhou. Such cross-industry alliances will strengthen the links among suppliers at different levels, allowing them to specialize and maximize their profits.
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More can be found at Trendforce.

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