China poised to play pivotal role in NAND flash industry
- 12 November, 2015 00:54
China is a growing presence in the NAND flash industry and is expected to play a pivotal role in supply and demand over the next two to three years, according to a new report.
According to research firm TrendForce, state-backed Tsinghua Unigroup has become a prominent example of the surge in Chinese deal-making in the semiconductor sector where the nation is filling production capability gaps with acquisitions and investments.
Tsinghua plans to buy a 15% stake in U.S. data storage company Western Digital (WD), a deal that indirectly allows access to the NAND flash industry from SanDisk's merger with WD.
The Chinese conglomerate also announced a deal to buy 25% of Taiwan's chip packaging firm Powertech. By becoming Powertech's largest shareholder, Tsinghua Unigroup will obtain crucial technologies and resources for the packaging and testing of memory products.
Tsinghua also reportedly attempted to buy U.S. based Micron Technology.
Though the NAND flash market "is weak in [the] short term due to oversupply, growth in various applications has been very rapid from the long-term perspective," Sean Yang, assistant vice president of TrendForce's DRAMeXchange division, stated in the report.
"NAND flash is certain to become the core technology in the development of the storage and memory industries in the near future" as the number of consumer electronic products that include solid-state drives (SSDs) and embedded MultiMediaCards (eMMCs) increases, Yang added. eMMC is a denser form of NAND flash that's used in smartphones.
Chinese domestic DRAM and NAND flash consumption is dramatically increasing with the rise in popularity of Chinese PCs and smartphones, according to TrendForce.
China this year will purchase $12 billion worth of DRAM and $6.67 billion worth of NAND flash, representing 21.6% and 29.1% of the global revenues for those markets, respectively.
This year, NAND flash memory, which can be found everywhere from data centers to smart phones, is estimated to be a nearly $28 billion industry with a double-digit annual growth rate.
Smartphones, tablets and SSDs will account for about 85% of the industry's overall capacity demand, which is expected to grow by 42.8% this year, according to TrendForce.
Major NAND flash manufacturers have also expanded operations in China. For example, the world's leading NAND flash maker, Samsung, has made significant investments in the Chinese market, including raising the capacity of its Xian, China fabrication plant, which makes 3D NAND flash chips.
Samsung anticipates the Xian fab production facility to be operating at its top capacity by next year.
Intel will also begin producing 3D-NAND flash chips in the second half of next year at its Dalian, China fab, which is being converted from a processor fab to a memory fab.
There is also increasing domestic support for NAND flash technologies, including by major Chinese foundries such as Semiconductor Manufacturing International Corp. and XMC, which are currently the most proactive among their domestic peers. Their respective technologies, products and strategies are steadily maturing.
"XMC in particular is poised to create an impact in the NAND flash industry in the next two to three years as it is working on the advanced 3D-NAND flash," TrendForce's report stated.
3D NAND flash is a method of stacking memory cells one atop another like a microscopic skyscraper to create denser memory that not only has greater capacity but is cheaper to produce. All major NAND flash suppliers today have their own versions of 3D NAND flash.
Development of NAND flash controller chips and firmware will be key for the Chinese storage industry moving forward as the components have to meet the national standard on information security that was established for the industry.
The technical capabilities of Chinese controller chip manufacturers have advanced to a certain level with the takeoff of the domestic market and are rapidly gaining international visibility, TrendForce said. For example, Sage Microelectronics (SageMicro), a four-year-old company based in Hangzhou, China, plans has released a 10TB SSD in an attempt to break into the U.S. market.
The company, which emerged from quiet mode last year, already sells a 5TB SSD in a 2.5-in. form factor, along with SD cards and NAND flash memory controllers. The 8TB SSD simply adds another stack of eMMC flash memory crammed into a 9.5mm-high SSD.
China has also increased its vertical integration within the NAND flash industry. For example, Chinese memory module maker Netcom and U.S.-based Marvell, a major supplier of controller chips, have penned a strategic development partnership.
"As a fabless [integrated chip] design house seeking to develop the Chinese SSD market, Marvell will take advantage of Netcom's complete production chain in Suzhou," TrendForce stated. "Such cross-industry alliances will strengthen the links among suppliers at different levels, allowing them to specialize and maximize their profits."