In May this year, Chinese regulators banned the use of Micron Technology memory chips in critical information infrastructure facilities. It was thought that these restrictions would benefit both Korean and Chinese memory suppliers, but after the Chinese industry has operated under these restrictions for several months, it can be argued that it was the Korean manufacturers who were in the black.
The point is as explained South China tomorrow postMost of the critical infrastructure is server systems that require advanced memory chips not currently available from local manufacturers. For this reason, the demand in this area has shifted towards the products of South Korean suppliers. In particular, the Chinese CXMT can only offer chips of the DDR4 generation, although it occupies 21% of the market in the segment of DRAM chips. Accordingly, Micron’s stalled shipments, which accounted for about 15% of the local market before the Chinese authorities imposed sanctions, are being replaced mainly by products from South Korean competitors, represented by Samsung Electronics and SK Hynix.
Chinese company YMTC is capable of producing 232-layer 3D NAND memory, but it occupies no more than 3% in the local market, and US sanctions against this manufacturer will limit its ability to produce the most advanced memory, necessarily restrict. The US export control regulations in their current version only allow devices for the production of 3D NAND memory chips with a maximum number of layers of 128 pieces to be shipped to China.
Samsung has completed the development of GDDR7 memory chips and will double the production of HBM memory next year. SK Hynix is the leader in the latter segment and controls about half of the world market for such memory chips. Chinese manufacturers do not offer HBM memory at all, and it is now in demand by artificial intelligence systems based on special computer accelerators. It is not surprising that Chinese customers in the server segment trust products from Korean storage providers.
If Chinese authorities continue to insist on the use of domestic storage in server infrastructure facilities, the quality of servers will inevitably suffer, Counterpoint analysts said. It will be difficult for YMTC and CXMT to rely on Chinese storage equipment suppliers as they lag far behind western competitors in terms of technological development.