Yangtze Memory and ChangXin forced to delay new factories and
lay off staff
Yangtze Memory Technologies
Corp. (YMTC) has faced delays over constructing a second plant
in Hubei province, China. (Photo by Shunsuke Tabeta)
SHUNSUKE TABETA, Nikkei staff writer
February 15, 2023
02:03 JST
WUHAN/HEFEI,
China -- Sweeping export bans imposed by the U.S. last fall have held up
plans by major Chinese chipmakers to expand operations, dealing a setback
to the government's ambitions to make the country a semiconductor
powerhouse.
Uncertainty
was the prevailing mood during a visit to the massive flagship production site
of Yangtze Memory Technologies, about 40 kilometers east of central Wuhan.
Both YMTC engineers and technicians at the site to deliver manufacturing
equipment had no idea when its second
plant, originally slated to start up in late 2022, would actually
come online.
"Things
like electrical equipment have been set up, but installation of chipmaking
equipment hasn't started yet," one said.
YMTC
was founded in 2016 by Tsinghua Unigroup in partnership with the National
Integrated Circuit Industry Investment Fund, commonly known as the "Big
Fund." It began mass-producing NAND flash memory chips in 2019.
After
Unigroup went bankrupt, YMTC came under the management of the Big Fund and
local authorities. It focused on honing its ability to compete in the global
NAND market, reaching the point that Apple had reportedly been set to use
YMTC chips in iPhones.
The
company broke ground in 2020 on a second factory -- estimated to cost around
100 billion yuan ($15 billion at current rates) -- to triple production
capacity.
But
its ascent has stalled since Washington announced broad, stringent curbs on
exports of technology and gear for making advanced semiconductors, as well as
restrictions on U.S. nationals providing support to Chinese chipmakers.
That
September, not long before the sanctions were announced, Simon Yang -- who
reportedly holds a U.S. passport -- stepped
down as CEO of YMTC. The following month saw the departures of
American engineers from U.S.-based chipmaking equipment companies who had
supported YMTC's expansion plans.
The
delays have forced YMTC to cut jobs.
"Our
department started layoffs in January of around 10% of its staff,"
said an engineer who has worked at the company for about three years.
"They've also frozen the hiring of graduate students."
The
atmosphere at the company is grim, with its future looking uncertain, the
engineer said.
ChangXin Memory
Technologies (CXMT) is also encountering delays in building its research and
development center in Anhui province, China. (Photo by Shunsuke Tabeta)
ChangXin
Memory Technologies, which makes DRAM chips using advanced technology covered
by the sanctions, has also had a wrench thrown into its plans.
CXMT
finished a new office building for a planned second plant located near the
company's headquarters in the city of Hefei. But the construction of the
production facility itself is facing lengthy delays.
"We
planned to begin operations in 2023, but it won't happen until 2024 or 2025 at
the soonest," said a CXMT engineer.
The
construction of CXMT's new research and development center appears to have
made hardly any progress as well.
"The
hiring of graduate students has been suspended temporarily," said the
engineer, who added the company is cutting 5% to 7% of staff,
depending on the department.
Neither
YMTC nor CXMT responded to questions or requests for comment.
The
government under President Xi Jinping announced the "Made in China
2025" initiative in 2015, which positioned semiconductors as a critical
industry. The Big Fund was established as part of the initiative
and has strongly supported the development of the chip industry.
First-phase investments reached roughly 140 billion yuan.
Thanks
to that fund, China's semiconductor industry attained rapid growth, with the
three government-backed memory companies YMTC, CXMT and Fujian Jinhua
Integrated Circuit Co. leading the way.
But as
tensions flared between the U.S. and China, Washington tightened
restrictions on exports to the Chinese chip sector, the technology of
which lagged behind that of the U.S. industry.
Huawei
Technologies, the telecommunications equipment manufacturing heavyweight, fell
under the sanction crosshairs in 2019. China's largest chip foundry
Semiconductor Manufacturing International Corp. soon found itself targeted
as well.
China's
rate of self-sufficiency in semiconductors grew to 24% in 2021 from 10% in
2015, according to International Business Strategies. The U.S. research company
put out a report in June last year that predicted the ratio will exceed 50% in
2030. But when the U.S. later toughened trade sanctions, IBS CEO Handel Jones
warned the self-sufficiency share might stall at 30% by that date.
The
semiconductor market has been lackluster as of late, with Chinese
companies -- the main clients of YMTC and other chip suppliers -- easing
up on orders. Considering those dynamics, the delayed expansion in
production will not likely amount to a critical blow to the Chinese
government's ambition of building a self-sustaining supply chain.
At the
same time, the U.S. pressure campaign against the Chinese semiconductor
industry is visibly taking its toll, putting the country on a steeper path on
realizing its chip dreams.
https://asia.nikkei.com/Business/Tech/Semiconductors/U.S.-sanctions-derail-China-chipmakers-expansion-plans
Apple freezes plans to use China's YMTC chips - Nikkei
https://www.reuters.com/technology/apple-freezes-plan-use-chinas-ymtc-chips-nikkei-2022-10-17/
Warner, Rubio Urge DNI to Review Risk Chinese Chipmaker YMTC Presents to National Security
Sep 22 2022
Earlier this month, Apple publicly acknowledged that it is considering procuring NAND memory chips for future iPhones from Yangtze Memory Technologies Co. (YMTC), a state-owned company with extensive links to the Chinese Communist Party (CCP) and its armed wing, the People’s Liberation Army (PLA).
U.S. Sens. Mark R. Warner (D-VA) and Marco Rubio (R-FL), Chairman and Vice Chairman of the U.S. Senate Select Committee on Intelligence, sent a letter to U.S. Director of National Intelligence Avril Haines calling for a public analysis and review of YMTC and the risks it presents to U.S. national security.
.....
https://www.warner.senate.gov/public/index.cfm/2022/9/warner-rubio-urge-dni-to-review-risk-chinese-chipmaker-ymtc-presents-to-national-security
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