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YMTC Possibly Needs To Abandon 3D NAND Flash Because Of Sanctions

YMTC may not be able to produce competitive 3D NAND memory in the next few years due to its inclusion on the U.S. Commerce Department’s Entity List, according to TrendForce. As a result of the sanctions, the company will face difficulties in obtaining wafer fab equipment and other goods from U.S. companies, hindering its bit growth. Additionally, its non-Chinese partners may decide to stop working with YMTC.

The U.S. Department of Commerce will review all transactions of wafer fab equipment, software, technologies, support services, and other goods of U.S. origin to YMTC, with the presumption of denial. This will make the procurement process challenging and time-consuming for YMTC, which relies on advanced tools from various companies, including those in the U.S., Japan, and the Netherlands.

YMTC’s bit output is expected to decrease by 7% year-over-year in 2023 due to its inability to obtain leading-edge fab tools and other technologies from American companies, leading to technological stagnation. Meanwhile, other 3D NAND makers are expected to transition to 200-layer 3D NAND memory by 2024 and may even begin producing 300-layer 3D NAND products for the best SSDs. YMTC may lose market share to companies like Micron, SK Hynix, and Samsung as their flash memory becomes more cost-effective. YMTC may also struggle to work with companies outside of China due to its presence on the Entity List.

As a result, YMTC may need to shift its focus to specialty 2D NAND flash or become a contract maker of chips specializing in mature fabrication processes in order to survive.

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