As China strives to reduce its reliance on foreign semiconductor products, demand for flash memory chips at top domestic memory chip maker YMTC has risen sharply, especially in government and military-related projects.
China is aggressively developing computing infrastructure to support the development of generative AI, which has led to a surge in demand for locally manufactured components ranging from graphics processing units to flash memory chips. As one of the industry leaders, YMTC and Huawei Technologies are the main beneficiaries of this national plan.
Despite being blacklisted for U.S. trade at the end of 2022, YMTC's business growth remained strong. The Wuhan-based company continues to make breakthroughs in cutting-edge products and is the preferred supplier for government-related projects in China.
YMTC insiders have made it clear that its technology is not military-grade and is not suitable for military applications. The Company has never provided technology or products for military use and remains blinded to any military-related projects employing its products.
Due to strong domestic demand, the price of YMTC enterprise NAND flash memory chips has increased in the past few months. Government-related entities prefer YMTC over foreign competitors such as Micron Technology in the United States and Samsung Electronics in South Korea. However, earlier this year, YMTC's Wuhan factory suspended production due to equipment failures, and the company had to borrow equipment from another local fab.
Chart: YMTC's domestic demand is strong
Founded in 2016, YMTC has quickly narrowed the gap with its peers as a latecomer to the global flash memory industry. In 2022, the company was reported to have produced a "232-layer NAND flash memory" that was once ahead of global giants such as Micron, Samsung, and SK hynix. Despite being subsequently blacklisted for U.S. exports, YMTC still strives to comply with U.S. on-site inspections.
Chinese semiconductor experts have called on the government to give preference to locally made products when building computing systems. Advocates recommend that the government provide for the use of domestically produced SSDs in its procurement policy and tender documents. Last year, both Micron and Samsung saw a decline in revenue in China. The U.S. company's fiscal year ended in late August with revenue down 34 percent in Chinese mainland and Hong Kong down 80 percent, while the South Korean company said its revenue in China fell 21 percent.
Global NAND flash sales fell last year due to a collapse in demand, with Samsung and SK hynix cutting production, according to a report by research firm IDC. But according to Taiwanese research firm TrendForce, the market has shown early signs of recovery this year.
The rise of YMTC not only reflects China's independent and controllable strategy in the semiconductor industry, but also reflects the urgent demand for high-performance memory chips in the domestic market. Despite the challenges of international trade and production, YMTC is expected to continue to expand its presence in domestic and foreign markets with its technical strength and government support.
