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© 4designersart dreamstime.com Analysis | July 29, 2016

Tsinghua Unigroup and XMC team up

China’s state-backed technology conglomerate Tsinghua Unigroup has acquired a majority stake in XMC, a major compatriot semiconductor manufacturer, and brought it under a new holding company called Yangtze River Storage Technology.
From this point on, XMC will be responsible for coordinating the development of China’s memory industry, which is wholly in pursuit of NAND Flash production.

“The tie-up of Tsinghua Unigroup and XMC opens up a new chapter in the development of China’s memory industry and is expected to help the country move towards the goal of self-sufficiency in memory chips,” said Sean Yang, research director of DRAMeXchange, a division of TrendForce. “For almost a year, Chinese semiconductor companies have demonstrated flexibility in their strategic thinking and determination in executing their plans as they build up an indigenous memory industry. Their abilities are getting noticed and their actions will have significant effects on the global memory market.”

According to DRAMeXchange, NAND Flash bit demand will expand at a compound annual growth rate of 47 percent from 2011 to 2016. Demand growth will remain high in the next decade on account of the strong SSD market. This is also the reason why Tsinghua Unigroup and XMC have partnered up to make substantial investments in the NAND Flash industry.

Yang pointed out that the technology conglomerate and the semiconductor maker complement each other in many ways: “Formerly a NOR Flash manufacturer, XMC has experience in memory chip production, fab building and capacity installation. Tsinghua Unigroup, on the other hand, is proficient in fund raising and merger/acquisition. Together, they will be able to feed off each other strengths. Furthermore, much of the available resource and capital will be funneled into the domestic memory industry. This in turn would make future consolidation efforts within the industry more effective. In sum, the cooperation between Tsinghua Unigroup and XMC will facilitate growth in China’s memory industry and increase its independence. Internally, the industry will have better development focus. On the global stage, the industry will have a stronger bargaining position. The ensuing developments from this partnership deal will be worth keeping a close eye on.”

Currently, XMC is ahead of other domestic memory makers in the NAND Flash race. Its 3D-NAND technology, which is co-developed with U.S.-based semiconductor company Spansion, is now at the initial stage of mass production for 32-layer stacked chips. With the support of the government’s National Integrated Circuitry Industry Investment Fund, XMC also announced the building of a 3D-NAND fab this March. This new fab is scheduled to be in operation during the first half of 2018.

Major international NAND Flash suppliers have also been busy lately. Samsung continues to invest in its memory fab located in Xian, China. At the same time, the South Korean memory giant is also planning a new fab for 3D-NAND products at home in the city of Pyeongtaek. Western Digital and Toshiba’s New Fab 2, a facility in the Japanese city of Yokkaichi, continues to grow in capacity.

This 3D-NAND fab was originally a joint project between Toshiba and SanDisk, which was recently acquired by Western Digital. SK Hynix currently has several plants producing NAND Flash. In South Korea, the memory maker’s fab M14 will begin its second phase of 3D-NAND production in the first quarter of 2017. This is in addition to the existing NAND Flash production in M11 and M12, which are also located in the country. While Micron does not plan to build any new fabs, the U.S. memory maker is expanding its Fab 10X in Singapore.

“Since a fab that produces 3D-NAND Flash costs several times to build and set up than a fab making planar (2D) NAND Flash, a good option for Micron will be team up with Tsinghua Unigroup/XMC under same arrangements it has with Inotera,” said Yang. “Based on this particular joint venture model, Micron will provide the technology while its partner(s) provide the capital and build the manufacturing plant. Micron therefore will have gain additional capacity for a fairly long period without shouldering too much financial burden. This type of teamwork is also an opportunity for Micron to catch up with Samsung and Western Digital/Toshiba in market share. It will be interesting to see if Micron will seize the moment to work with Tsinghua Unigroup and XMC.”
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More can be found at Trendforce.

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