China's Memory Maker YMTC Scores $7B To Counter Bans

Embattled memory vendor YMTC is getting a 49 billion yuan ($7 billion) infusion of funds from Chinese state-backed investors in the wake of sweeping trade restrictions against the company by the US and its allies.

Bloomberg reports that approximately 12.9 billion yuan ($1.9 billion) of the money will come from China's semiconductor investment group – better known as the Big Fund. Meanwhile, the South China Morning Post is reporting the chip shop has received another $5.1 billion from Hubei Changsheng Development and Changjiang Industry Investment Group.

Much of China's semiconductor building capacity lags behind Taiwan, South Korea, and the US by at least two years – particularly when it comes to advanced process nodes. But YMTC is seen as a genuine threat to other memory vendors including Samsung, SK hynix, and Micron.

As our sister site Blocks and Files previously reported, YMTC was in the process of developing 232-layer NAND memory that would compete directly with the most advanced modules from Micron, hynix, and Samsung. Even iGiant Apple had reportedly been considering using YMTC memory in some of its products sold in China.

However, YMTC's future was cast into doubt last year after the Biden administration began taking steps to cut off the vendor's access to critical memory manufacturing equipment. The US Commerce Department warned several US semiconductor equipment vendors – including Lam research, Applied Materials, and KLA Corp. – to cease the sale of equipment to Chinese companies. And in October, YMTC was one of 31 Chinese companies placed on the agency's "Unverified List" – effectively barring it from importing controlled US goods.

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At the same time, the US agency formalized restrictions on the export of equipment and software necessary to produce DRAM chips below 18nm, NAND silicon with more than 128 layers, or logic processors below 14nm.

In the months since, the US has put intense pressure on its allies in South Korea, Japan, Taiwan, and the Netherlands to enact similar restrictions on the export of chipmaking equipment and materials to China.

The impact of these sanctions on YMTC is expected to be considerable. Industry watchers at TrendForce projected that as a result of US efforts, the memory vendor would not see supply grow 60 percent year over year as originally thought and would mostly likely decline by seven percent in 2023.

Making matters worse for YMTC, the DRAM and NAND flash market has essentially evaporated in recent months, as declining demand forces lower average selling prices. While this trend isn't unique to the Chinese memory vendor — Samsung, SK hynix, and Micron have all experienced considerable revenue declines in recent quarters — the US sanctions add an additional level of challenge, making the investments in YMTC even more timely. ®