At the beginning of the National Day in 2022, the memory chip industry in Chinese Mainland, which is still in its infancy, was hit by the precise blockade of the United States government.
First, the US Department of Commerce (BIS) prohibited US suppliers from providing production equipment to manufacturers producing DRAM and 3D NAND memory chips in Chinese Mainland. American suppliers provide DRAM chips of 18nm and below, and 3D NAND flash memory chips of 128 layers and above to manufacturers of DRAM and 3D NAND memory chips in Chinese Mainland for control. The export of such chip manufacturing equipment must go through strict review and obtain a license before export. The second is that the US Department of Commerce has released an "unverified list", which includes 31 Chinese companies and Yangtze River Storage.
Although as far as the procedure is concerned, as long as the license is obtained, the U.S. Department of Commerce also emphasizes that, for semiconductor manufacturers in Chinese Mainland to purchase equipment from U.S. suppliers, the U.S. Department of Commerce will adopt the principle of "Presumption of denial" for the application, that is, unless there is evidence to prove that the transaction will not have an adverse impact on the national security and foreign policy of the United States, it will refuse to issue licenses, which will undoubtedly greatly increase the difficulty for Changjiang Storage and Hefei Changxin to obtain licenses for equipment purchased from the United States in the future. At the same time, it hinders normal technical exchanges between Chinese storage chip companies and the global industry, causing serious impacts on both the supply and sales sides, undoubtedly pushing the Chinese storage industry into a "darkest moment".
The United States' abuse of technological hegemony and restrictions on China's continued iteration of storage chip technology may seem like a breath of air, but in reality, it will strangle the nascent Chinese storage industry in its infancy. Unlike other logic products that have mature manufacturing processes, storage is an industry highly sensitive to scale and technology iteration cycles. Technology and scale determine costs, and without a cost advantage, it is equivalent to handing over the market to competitors. If this continues, China's storage industry may fall into the same fate as Japan's DRAM industry in the future: complete extinction.
Whose cheese did China store in swaddling clothes move?
Storage chips are not only widely used in products such as smartphones, tablets, and PCs, but also have become a strategic emerging industry related to the success or failure of next-generation information technology as society enters the era of cloud computing and big data. Storage chips are related to national information security, the security of the information technology industry chain, and even the development of higher-level artificial intelligence in the future. In recent years, information storage security incidents have occurred frequently. Once information storage security is threatened, it will endanger the development of all industries such as the party, government, military, petroleum, chemical, nuclear energy, finance, etc. It is an important part of the overall national security strategy. The fundamental reason for policy promotion is based on autonomous and controllable demand.
At present, the relevant technology accumulation in Chinese Mainland is weak, the self-sufficiency is basically zero, and the ability to control is completely lost. In the "National Integrated Circuit Industry Development Promotion Outline" released in 2014, it was specifically pointed out that key chip industries such as new storage should be developed to seize the high ground of future development. Driven by the wave of domestic substitution of key core technologies, Chinese Mainland has risen to the challenge, opened the strategic layout of memory chips, and strived to make a difference in this high-end industry.
There are three considerations for Chinese Mainland to enter the memory chip industry: first, the market size is large enough; second, Chinese Mainland does not have a say in market prices; third, the information security strategy. At the national level, there needs to be a clear industry positioning regarding how to enter the industry, the extent and scale of the entry.
2016 is the first year of the development of the memory chip industry in Chinese Mainland. From February to July, three major memory chip companies in Chinese Mainland, namely Jinhua Integration, Hefei Changxin and Changjiang Storage, were established successively. 2019 is the first year of memory chip industrialization in Chinese Mainland. The 32 layer 3D NAND flash memory chip of Yangtze River Storage has achieved mass production, and the 64 layer 256Gb TLC 3D NAND flash memory chip has been announced to be put into production; Hefei Changxin announced the first 8Gb DDR4 product manufactured using 19 nanometer technology.
Thanks to the efforts of Changjiang Storage and Hefei Changxin, the emergence of domestic memory and solid-state drives has broken the monopoly of overseas giants, allowing consumers to enjoy more benefits.
It was previously reported that Apple was considering using the 3D NAND flash memory chip of Changjiang Storage in the iPhone 14, which proved the strength of local companies in Chinese Mainland in the industrialization of memory chips.
After the news of Apple's selection of Changjiang Storage's 3D NAND flash memory chips came out, several US senators believed that purchasing 3D NAND flash memory chips from Changjiang Storage would bring significant privacy and security vulnerabilities to Apple's global digital supply chain, and demanded a national security review of this transaction to prevent it from posing a threat to the US economy and national security. Due to increasingly strict control and the dual control of domestic public opinion in the United States, Apple had to change its procurement plan, and even the supply and procurement plans of various related companies in the United States had to be changed. And this change is definitely what overseas storage chip giants hope to see. After all, as a rising star in the fierce market competition, Changjiang Storage is bound to challenge overseas giants in the cheese industry.
How Chinese Mainland's Memory Chip Industry Goes Out of the Dark Moment
Chinese Mainland is a major consumer of memory chips. China imports more than 300 billion dollars of chips every year, of which memory chips account for more than 30%, consuming nearly 50% of the world's memory capacity. In the era without Changjiang Storage and Hefei Changxin, Micron from the United States, KIOXIA from Japan, Samsung from South Korea, and SK Hynix completely controlled the pricing power of storage chips, and arbitrary price increases were not uncommon.
The US government has raised Apple's purchase of 3D NAND flash memory chips from Changjiang Storage to a national security issue. If Changjiang Storage and Hefei Changxin really stagnate or even collapse, how can China's information security be guaranteed? How to ensure the stability of China's supply chain without being constantly "choked"? How to ensure the sustainable development of the future industrial chain?
In 1986, Japanese manufacturers held over 50% of the global semiconductor market share and 80% of the world DRAM market share. However, due to the failure to grasp the era of consumer PC, coupled with the restrictions imposed by the Plaza Accord and the US Japan Semiconductor Agreement, as well as the strong impact from South Korea, the profitability of the Japanese semiconductor industry has declined, and its market share has rapidly declined, leading to the beginning of decline. Today, Japanese semiconductor manufacturers only hold about 10% of the global semiconductor market share.
At present, under the action of the United States without a bottom line, the good situation of the development of the integrated circuit industry in Chinese Mainland is not the worst, only worse. The memory chip industry in Chinese Mainland and even the chip industry in Chinese Mainland have faced a dark moment. How can we learn from the experience of others and not repeat the mistakes?
Faced with a complex external environment, we must never let our guard down. We need to abandon all illusions and take action to continue promoting cross global supply chain cooperation with a more open attitude. At the same time, the enterprises themselves continue to struggle tenaciously. The government should guide the upstream and downstream of the industrial chain to strengthen linkage, and protect the fundamentals of the chip industrial chain in Chinese Mainland.
To achieve this, it is necessary to implement a national strategy of technological innovation, independent research and development, and independent production. We must continue to adhere to industrial upgrading and not give up development due to restrictions; Continuously increasing research and development investment, overcoming bottleneck technologies, and forging a path of independent and self reliant development as soon as possible.
At the strategic level, it is necessary for the central government to coordinate and integrate resources from all parties. Firstly, vigorously recruit high-end technical talents, through technology introduction and independent development, integrate innovation to achieve independent development based on the introduction and absorption of existing mature technologies, gradually catch up with advanced processes, and surpass them; Secondly, actively layout the research and development of new memory technologies, and invest funds and talents in several current new technologies including RRAM, MRAM, PRAM, etc., instead of just discussing which technology may win in the future. As long as it can be mass-produced, there will always be a place to use it.
In terms of policies, the government should actively promote the localization strategy, increase the localization rate of information industry machines and chips, and truly achieve security and controllability. Through tax regulation, guide and encourage investment and financing in the memory industry, and build a favorable industrial environment.
At the financial level, it is necessary to adhere to sustained, long-term, and large-scale investments. If China is positioned to surpass the first group and play a leading role in the market, it needs to achieve a market share of about 30%. Considering the authorization and absorption of existing technologies, the upgrading of production technologies, and the research and development of new technologies, the total investment should be 1 trillion yuan or even more, and this investment should be continuous and long-term.
In terms of market, the domestic market is very huge, with the local market consuming at least nearly $100 billion in storage chips every year. Driven by such a huge market, we can better leverage the advantages of upstream and downstream, and change the passive situation caused by the current foreign monopoly of storage chips.
Don't think that the United States is still breathing a sigh of relief for us to develop mature technology. At the critical moment of China's storage survival, we must abandon illusions, unite sincerely, calm down, strengthen independent research and development, and embark on a path of China's independent development of storage chips.
No winter is insurmountable
In fact, the semiconductor industry in Chinese Mainland has been developing tenaciously in the cold winter with "shackles". From Batumi in 1949 to the Wassenaar Treaty in 1996, the United States and its allies have been preventing Chinese Mainland from obtaining semiconductor integrated circuit technology and advanced products from overseas. But for more than 70 years, Chinese Mainland semiconductor integrated circuit enterprises and people from all walks of life have never been deterred by this, and they are still working hard to make China's semiconductor integrated circuit industry occupy a place in the world.
Now we are still like this. We are brave after we know the shame. We believe that the chip industry in Chinese Mainland will forge ahead and continue to pursue the peak of chips in the future.
Walking in the cold wind of the streets of a small town in Jiangnan, I suddenly remembered the title of the 2009 New Year's message from Southern Weekly, 'No winter is insurmountable'. Because of the cold, we are more sunny; We cherish it even more because we are facing threats.
Yangtze River storage refueling! Hefei Changxin, come on! Cheer up China's storage industry!
Please firmly believe that no winter is insurmountable!