China's YMTC promotes local production of up to 70% of new NAND factory equipment

(Beijing = Yonhap News) Correspondent Kim Hyun-jung = Reuters reported on the 5th (local time) that Yangzi Memory Technology (YMTC), a Chinese NAND flash company, is pursuing a plan to procure up to 70% of the semiconductor manufacturing equipment to be introduced at its new factory from domestic companies.

Reuters, citing two sources familiar with the matter, reported that YMTC has set a target for the proportion of Chinese equipment in the fourth factory scheduled to be built in Wuhan, Hubei Province, China, at 'minimum 60% and maximum 70%'.

This is a high figure compared to slightly more than 50% of Chinese equipment procurement for the Wuhan 3rd factory, which is scheduled to start operation at the end of this year.

Reuters evaluated that this plan shows progress in China's efforts to replace foreign semiconductor manufacturing equipment.

According to sources, Wuhan Factory 4 will produce YMTC's cutting-edge NAND flash with more than 300 layers of memory cells stacked vertically. It is expected to mainly focus on producing storage semiconductors used in data centers and artificial intelligence (AI) applications.

NAND flash is a memory semiconductor that preserves data even when the power is turned off and is used in smartphones, computers, and data centers. By stacking more memory cells vertically, more data can be stored in a semiconductor of the same size.

Construction of the 4th factory is expected to begin next year, but YMTC has reportedly only held preliminary discussions with equipment suppliers so far and has not placed a formal order.

Reuters explained that this is the first time that the construction schedule for Factory 4 and the target for procurement of Chinese equipment have been exposed.

Due to U.S. export controls, YMTC's access to some U.S. semiconductor manufacturing technologies is restricted.

The U.S. Department of Commerce added YMTC to the "Entity List," the U.S. government's trade blacklist, in December 2022, requiring U.S. suppliers to obtain permission to sell certain technologies to YMTC.

If YMTC's new factory operates as planned, it will secure a higher stacking level than the NAND that its competitors in China can produce.

Last month, Reuters reported that Samsung Electronics is converting its Xi'an factory in China to a 286-layer NAND production system, and SK Hynix is ​​working to increase the NAND stacking level at its Dalian factory from the existing 192 layers to more than 240 layers.

Chinese companies are already supplying most of YMTC's cleaning and polishing equipment, and are known to have made technological progress in the field of etching equipment required for advanced NAND manufacturing.

However, some sophisticated manufacturing processes, such as exposure and inspection, still depend on overseas equipment manufacturers.

Meanwhile, Reuters reported in April that YMTC plans to build two additional factories in Wuhan, increasing the total number of factories to five.

According to sources, factories 3, 4, and 5 are expected to process about 100,000 silicon wafers each month when fully operational, predicting that YMTC's overall production capacity could more than double its current capacity.