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China poised to play pivotal role in NAND flash industry

Lucas Mearian | Nov. 12, 2015
Chinese firms are investing heavily in U.S. flash manufacturers

NAND flash SSD chips
Intel is converting its fabrication plant in Dalian, China from producing processor chips to 3D NAND flash chips. Credit: Intel

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.


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