Korea’s technological advantage over China in memory chips is reduced to 3 years in HBM and only 1 year in NAND

The pace of development of the Chinese semiconductor industry is fast, very fast. So much so that it threatens to pulverize the historical leadership of South Korean manufacturers in the digital storage market. After consolidating 90% performance rates on DDR5 and projecting a volume that will equal Micron’s monthly production, the Korea Semiconductor Industry Association has issued a warning that leaves no one indifferent.

Much simplifying the issue, and always depending on the organization, South Korea’s tech gap narrowed to three years at HBMtwo years in conventional DRAM and just one year in NAND flash memories. China is tightening its grip and getting closer to South Korea.

This represents a considerable reduction in distances, which a few years ago was 5 years or more. CXMT, without going any further, is already carrying out tests of its fifth-generation memory HBM3E together with local design firms such as T-Head, a subsidiary of the Alibaba consortium. Additionally, there are plans to integrate these modules into commercial equipment over the next year. Chinese designers are just one step away from the HBM4 memory led by established companies such as Samsung and SK hynix.

An unstoppable evolution despite the restrictions of the United States

The rapid Chinese evolution is even more striking if we take into account the restrictions imposed by the United States on trade in cutting-edge lithographic machinery. That is, China still does not have access to ASML’s extreme ultraviolet, or EUV, scanners that would allow it to print microscopic circuits.

For this reason, Chinese manufacturers have shifted their efforts towards later integration architecture. For example, direct wafer bonding using YMTC’s X-Stacking technique makes it possible to shorten physical tracks and maximize bandwidth without resorting to state-of-the-art lithography equipment.

And, as far as mass production of three-dimensional modules is concerned, what CXMT does is coordinate its operations with national partners. At the same time, projects such as Huawei’s logical folding seek to achieve densities equivalent to 1.4 nanometer nodes using alternative architectures without UV machinery.

These imaginative solutions from Chinese companies allow compress up to three years of research into twelve months of intensive workaccording to academic analysts from Hanyang University.

The component crisis is an opportunity for CXMT

Another point that the source consulted mentions and that we cannot leave aside is that Samsung and SK hynix focus on AI data center chips. Curiously, this transfer of resources has paved the commercial path for its competitors.

The 98% increase in standard DDR5 memory during the first quarter due to lack of global stocks allowed Chinese firms to obtain very juicy contracts. Even Apple has knocked on CXMT’s door. In fact, this manufacturer reached a 10% share of the global DRAM market in the second quarter, while YMTC increased its weight in NAND storage to 14% globally.

This is also noticeable in the accounts of both companies. In the first half, CXMT soared its revenue by 873.6% year-on-year to $22.4 billion, generating a net profit of 77.6 billion yuan and an operating margin of 82%, surpassing Samsung’s chip business.

Although at the moment the results are not entirely positive, 64% of the turnover from the foreign market finances HBM’s R&D. This is a reinvestment cycle that should be of great concern to its Korean competitors.