In recent years the U.S. government has taken steps to crackdown on Chinese production of logic chips using advanced fabrication processes. In a bid to prevent the country from advancing its military capabilities. In addition to logic chips, U.S. officials are now mulling a crackdown on China's 3D NAND production industry. The biggest issue is that in addition to domestic makers, such restrictions will affect Samsung and SK Hynix.
The U.S. government is considering banning shipments of American 3D NAND production equipment to manufacturers of flash memory with more than 128 layers in China, which will affect Yangtze Memory Technologies Co. (YMTC), China's only domestic 3D NAND maker, reports Reuters citing sources familiar with the matter. But in addition, such a move will also hurt Samsung and SK Hynix, which produce 3D NAND memory in China too.
At present China's YMTC commands about 5% of global 3D NAND production, whereas Samsung, SK Hynix, and YMTC produce about 23% of the global 3D NAND output in China, according to Yole Intelligence cited by Reuters.
Previously the U.S. government restricted shipments of advanced chip production tools to China citing national security concerns. By contrast, 3D NAND hardly poses any threat to national security. Meanwhile, 3D NAND made in China competes against 3D NAND produced by American companies — Micron Technology and Western Digital. Protecting them from cheap flash memory produced in China will improve their market positions, but will naturally upset South Korea-based Samsung and SK Hynix.
If the action is approved, this will not only disrupt production of 3D NAND in China and leave the market without crucially important commodity memory, but will also hurt U.S.-based companies like Applied Materials, KLA, and Lam Research, which sell large amounts of equipment to China.
While American companies produce crucially important fab tools, there are companies from Japan, South Korea, and even Taiwan that may substitute some of the equipment made in the U.S. As a result, it is unclear whether the U.S. ban will have a desired effect on Chinese 3D NAND production industry in the long term.
Earlier this week the U.S. government imposed new export rules under which American companies will have to apply for an export license if they sell semiconductor production tools capable of producing chips using 14nm-class and thinner nodes.
