Korea is 5 years ahead of China in DRAM technology

The technological difference between South Korea and China in the DRAM and NAND flash technologies sectors is estimated at 5 years and 2 years, respectively.

The Overseas Economic Research Institute (OERI) of the Export-Import Bank of Korea estimates that the technological gaps between Korea and China in the semiconductor memory sector are 5 years for DRAM and 2 years for NAND flash memory.

ChangXin Memory Technologies (CXMT), a Chinese DRAM maker, is promoting mass production of second-generation 10-nm (1y or 16-nm to 17-nm) DRAM this year, the research institute said on May 30. On the other hand, Samsung Electronics and SK Hynix plan to mass-produce 5th generation 10-nm (1b or 12-nm to 13-nm) DRAM later this year or next. Given that the technological difference of a generation is about two years to two and a half years, the technological difference between the two countries is more than five years.

In particular, Samsung and SK Hynix have introduced or plan to introduce extreme ultraviolet (EUV) equipment for ultra-micro manufacturing processes, but it is difficult for Chinese companies to import EUV equipment due to US sanctions. For this reason, many experts say it will not be easy for China to reduce its technological gap with Korea.

The profitability of Chinese chipmakers is also low. OERI analyzes that the production of CXMT, which began mass production of the first generation of 10-nm (1x or 18-nm to 19-nm) DRAM in 2019, is still struggling with 75 percent even after two years. It is also known that its yield in the second generation DRAM is about 40 percent. Ultimately, CXMT’s market share of DRAM, which was less than 1% at the end of last year, will not recover significantly, analysts say.

“It is important for DRAM manufacturers to achieve technological excellence and economies of scale, but it is difficult for China to expand its market share due to major technological gaps with leading countries and US sanctions,” said Lee Mi-he, senior OERI researcher. “A rapid change will not be made in the DRAM sector, unlike the change of power in the display industry.”

In NAND flashes, China’s technological difference with Korea is estimated at about two years. Yangtze Memory Technology (YMTC), a Chinese memory semiconductor company, began mass production of 6th generation (128-layer) 3D NAND flashes in August 2021. Samsung and SK Hynix have been mass-producing them since 2019. Korean companies plan to mass-produced NAND flash drives with more than 200 layers from the end of this year to the beginning of next year, but the YMTC is not expected to be able to do so until 2024.

Variable, however, is the fact that Apple is currently considering installing NAND YMTC flashes on the iPhone. In this case, the YMTC is expected to vigorously pursue Korean chipmakers by expanding investment. In particular, the NAND flash memory sector, unlike the DRAM industry, is a growing industry, so there are many variables. If five or six NAND flash companies quickly expand their production capacity, price competition will arise, which could change the market share of NAND flash, experts say.

“It is difficult for Chinese companies to ensure profitability, but because they receive continued support from the Chinese government, they will be able to pose a threat to Korean companies in the long run,” Lee said. “American politicians are raising their voices against Chinese-made chips. If the United States tightens sanctions on Chinese-made chips, the current technological gap between Korea and China could be maintained.

Experts say Korea is about five years ahead of China in foundry technology. Korea’s Samsung Electronics and Taiwan’s TSMC are currently mass-producing 4-nm to 5-nm chips. On the other hand, the Chinese SMIC is at the 14-nm level, which lags behind by two or three generations. It is difficult for SMIC to provide 7-nm or more advanced manufacturing processes, as the United States bans the export of American semiconductor equipment and technology to China.

In particular, competition is intensifying in the foundry sector as TSMC, Samsung and Intel pour more than 100 trillion won respectively to take the technological lead. China is not yet a rival to Korea in high-tech foundry processes, experts say. However, they note that Korean companies such as DB HiTek may be experiencing difficulties due to increased investment in China in mature processes.

In addition, China registered a 9 percent market share in the fabless sector at the end of last year, ranking third in the world after the United States and Taiwan. Korea’s market share was 1%. Compared to the leading countries in the semiconductor equipment industry, Korea’s technological level is 90 percent, China’s 75 percent, and the difference between them is about 1.2 years.

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