Latest US blacklist spells trouble for China’s biggest domestic 3D NAND supplier

The US has ramped up trade restrictions against YMTC, China's biggest domestic flash memory supplier, triggering concerns that the chipmaker will face significant production issues and potentially be forced to exit the 3D NAND market. This is based on reactions from analysts and researchers to the news this week that the US …

[steamnut]

Too Far?

I understand the potential security problems with imported Chinese equipment but how far is Biden going to go? This is starting to look more like protectionism than technology concerns.

And we will be the ultimate losers as the US/EU alternative chip farms are still only at the "how big a grant do we get?" stage and that will make some chips scarce and more expensive.

What Biden is creating is technology inflation and he is misguided if he thinks it will support the US industries in the long term. And, in two years he could be gone with Republicans in charge again.

[MrMatt]

Re: Too Far?

You're asking for all other NAND companies to go out of business and have only YMTC standing. YMTC has been subsidized to the tune of $24 billion dollars to get where they are and they now use predatory pricing against the industry to take market share and eventually push everyone out of business. Yes, it's protectionism for the entire industry (Korea, Japan, US). They shouldn't be allowed in the same marketplace using predatory tactics when other companies cannot do it.

[CheesyTheClown]

Re: Too Far?

This was a fresh perspective for me to think about.

I think I'll give you a knee jerk reaction.

China subsidizes YMTC heavily and the result has been some extremely inexpensive flash for consumer and enterprise. I'm not completely sure, but I think I just spent about $100K on YMTC flash last month as the Huawei products were better than the Hitatchi, IBM, NetApp, Dell and SuperMicro solutions I evaluated. I believe the storage system I purchased was substantially faster for the price than their competitors because they had access to much less expensive enterprise SSD for cache.

Here's the thing though, China needs flash too.

In fact, China needs flash so badly that the government is willing to do what is necessary to make it competitive and affordable. As a result, China is a world leader in Flash technologies now.

Now here's the crux.

China is definitely going to lay on the funding thick now.

Consider what you just said. You're saying that YMTC is a threat the the rest of the world because China values YMTC so much they're willing to subsidize it. In fact, you're suggesting that these subsidies will run the competition out of business.

What do you think will happen now?

If YMTC is a threat, the Chinese government will ask them "What do you need?" and they will make it happen.

Already, China is growing and producing massive amounts of silicon ingots. They've already developed technology for slicing and polishing and transporting them. It's only a matter of time before the ingots grow large enough to start production (if they haven't already done so). That will cut Chinese semiconductor cost in half or even further.

Then there's lithography.

EUV isn't really a big secret and it's an evolution on earlier technology. Do you honestly believe that China can't make their own equipment?

When they do, they'll buy the machines for $1 million instead of $100 million and cut the price of semiconductors by 80% or more.

When Trump imposed those tariffs, he guaranteed that China would respond by investing trillions in making their own semiconductors. Also, they'll invest trillions to collapse TSMC which would collapse the Taiwanese economy which would make the west lose interest in Taiwan.

All this latest decision will do is accelerate China's timelines.

Trump and Biden will go down in history as the fools who signed the death of the western semiconductor industry.

[tooltalk]

Re: Too Far?

>> This is starting to look more like protectionism than technology concerns.

Biden protecting South Korea's chip industry? Samsung and Hyunix own about 60% of the nand/memory market share; Micron has tiny 20% share -- they are obviously the largest beneficiary.

>> we will be the ultimate losers as the US/EU alternative chip farms are still only at the "how big a grant do we get?" stage and that will make some chips scarce and more expensive.

That's what they said about the rare earth metals too -- China .ended up wihth 95+% of the market as a result back in 2009. China was all too happy to weaponize it against other countries (eg, Japan in 2010). The world finally woke up to this danger of China owning dominance marketshare or singular source for anything. China is accountable for slightly less than 2/3 of the rare metals today.

[fxkeh]

"beating global rivals like Micron in the US as well"

Surely a completely unrelated factor in the action being taken against them.

[TheInstigator]

When and how will China retaliate?

This is now very obvious it's no longer to do with national security - and as others have pointed out - everything to do with protectionism and ensuring Chinese companies don't overtake US ones.

It'll get to the point that the Chinese will be banned to do with anything tech related unless it's at least a decade or two behind what the West - or more accurately - the US offer - at which point they'll be quick to point out how old the tech they are using is.

There was a point with Japanese tech such as TVs etc (e.g. Sony, Panasonic etc) where their tech was far better than anything the West could make - I do wonder whether such a situation if it were to re-occur now - would be allowed to happen, or whether Japanese firms would suddenly be labelled as security risks. There is a possibility that Japanese companies would be allowed to continue to develop tech as the West generally gets along with companies they have - at some point in the past - entirely dominated from a military perspective - it's almost as if the mentality is "if they get too big for their boots we can beat them again in a war as we did last time"

[b0llchit]

Re: When and how will China retaliate?

They may opt to retaliate more subtle.

China sits on the majority of rare earth production. Just imagine the situation when they start to push the availability curve a bit harder.

West: We would like to buy raw material xyz.

East: Yes sir, no problem sir. We can deliver in 27 months at mega$price. For an additional giga$price we may be able to reduce the lead time to 14 months.

[TheInstigator]

Re: When and how will China retaliate?

I'm sure the West would invade in such a situation - to ensure the continuity of civilisation, freedom, democracy and the rule of law of course.

They got away with it in Iraq (for oil) with no legal censure - I'm sure they'll do it again

[b0llchit]

Re: When and how will China retaliate?

I'm sure the West would invade in such a situation...

One does not simply invade China. The extremely populous country with canon-food to spare and nuclear weapons that can reach any "home". That would simply be enacting MAD.

Ah well, maybe it would be good to go MAD. Then we'd probably have solved all the long term problems of greenhouse gases, overpopulation and all other associated problems.

[TheInstigator]

Re: When and how will China retaliate?

No-one knows how ready their nuclear arsenal is - that very arsenal could be used as the prelude for war/further sanctions.

I think that is probably another way the West will secularise China - once the economies have been separated to an extent, they will put China on the sanction list ...

Also in terms of having a lot of people - in terms of males of fighting age (and condition) - combined with the ability to actually GET them to somewhere they can do damage - not so much.

[mark l 2]

Re: When and how will China retaliate?

The US and UK might have been Ok with military interventions Iraq as they knew the intelligence for Saddam having WMD was actually flawed, but we have seen how the West react to a country they know has WMD's by how they have handled Russia's invasion of Ukraine. So there is no way they would risk invading China. So instead the US are basically trying to sanction China when it comes to its tech sector based on 'national security' concerns.

[Yet Another Anonymous coward]

Re: When and how will China retaliate?

Fighting a land war in Asia - always a good idea

[TheInstigator]

Re: When and how will China retaliate?

If you can mobilise the rest of Asia against China - not so hard - and what's even better is you don't even get any of your own army (i.e. the US's) dead

[Anonymous Coward]

Re: When and how will China retaliate?

Rule 1, on page 1 of the book of war, is: “Do not march on Moscow”. Various people have tried it, Napoleon and Hitler, and it is no good. That is the first rule. I do not know whether your Lordships will know Rule 2 of war. It is: “Do not go fighting with your land armies in China”. It is a vast country, with no clearly defined objectives.

— 1st Viscount Montgomery of Alamein In the House of Lords, 30 May 1962

[Yet Another Anonymous coward]

Re: When and how will China retaliate?

Ironically even the (white) Russians failed at marching on Moscow in 1919

[C Berlin]

Re: When and how will China retaliate?

Don't invade Moscow?

Maybe you need to be a little bit better equipped and invade in the winter?

Not these western wimps who don't even know how to dress in winter but our Brethren from Mongolia in 1238 :-)

[Yet Another Anonymous coward]

Re: When and how will China retaliate?

>or whether Japanese firms would suddenly be labelled as security risks.

It's the textbook case. In the 80s Japanese LCD makers were blocked from the USA because LCD were a vital military technology for fighter cockpits. Japan was instead forced to build and export laptops instead

[MachDiamond]

Re: When and how will China retaliate?

All China has to do it slow shipments of cheap junk to Walmart, Amazon, Target and the biggest middlemen that supply smaller stores and those companies will have nothing to sell. Not good for stock prices.

[Anonymous Coward]

Its potential options could include abandoning the 3D NAND flash market or pivoting to manufacturing logic semiconductors using a mature process, according to TrendForce.

Or going to the best local manufacturers, getting some govt support ("Yes:whatever it takes") and furiously substituting/copying/fixing everything they have to to keep up production.

And of course the CN govt can ban local market product from using foreign flash chips.

Well luckily the Chinese are well known to be far too slow and lazy to do any of that.

[Will Godfrey]

O really?

So here we have the worlds youngest civilisation (for some undefined value of 'civilised') thinking it will just walk over the worlds oldest one.

Could get 'interesting'.