Due to concerns over quality and safety, Japanese companies will not prioritize Chinese chips even if they are significantly cheaper.

Frontier Insights

According to Nikkei Chinese, Chinese companies are making continuous strides in the field of semiconductor NAND Flash chips. Yangtze Memory Technologies (YMTC) has already captured 10% of the global flash memory market in terms of sales share, with the goal of increasing this percentage to 15% by 2026.

Data released by the technical analysis firm TechInsights shows that NAND Flash chips manufactured in China are 10%–20% cheaper than those produced in other countries. If Chinese manufacturers continue to advance in the memory sector, Japanese, American, and Korean companies will face challenges such as declining market share and shrinking profit margins.

Domestic Technology

In 2018, YMTC introduced its independently developed Xtacking architecture. The following year, the company achieved mass production of 32-layer 3D NAND flash memory and simultaneously announced the completion of 64-layer 3D NAND flash memory development.

In 2022, YMTC launched a 232-layer 3D NAND flash memory chip, reaching internationally leading levels in both stacking layers and storage density. That same year, the United States added YMTC to its Entity List, imposing export controls on the company.

In 2024, based on the latest Xtacking 4.0 architecture, YMTC achieved a 270-layer flash memory chip stack. This flash memory boasts a read speed exceeding 14.5 GB/s, on par with top-tier global SSD products. The emergence of this technology directly narrows the gap between Chinese and international companies, empowering Chinese firms to compete on the same stage as South Korea’s Samsung, America’s Micron, and Japan’s Kioxia.

According to a report by research firm Counterpoint, YMTC’s revenue share in the global flash memory market is gradually increasing.

Due to yield rate issues, its current revenue share remains somewhat lower compared to international companies. However, Chinese-brand consumer products are widely adopting YMTC’s flash memory chips. As shipments of Chinese products increase, YMTC’s market share and revenue share are expected to rise correspondingly.

In the DRAM field, ChangXin Memory Technologies (CXMT) is a leader in China’s memory industry. Compared to the fiercely competitive flash memory market, the DRAM market is more akin to an industry dominated by a few key players.

Counterpoint’s report indicates that Samsung, SK Hynix, and Micron collectively account for over 90% of global quarterly DRAM revenue share, while China’s CXMT holds only about a 5% share.

Currently, for high-bandwidth memory (HBM) used in the AI industry, products from Samsung and SK Hynix have reached the sixth generation, whereas CXMT remains at the third generation, lagging approximately five years behind in technology.

Despite this gap, Chinese semiconductor companies are rapidly catching up. Last month, at an international semiconductor exhibition, CXMT showcased its independently developed LPDDR5X and DDR5 memory for the first time.

Its DDR5 memory achieves a maximum speed of 8000 Mbps and a maximum single-die capacity of 24 Gb (3 GB), fully catching up to world-class standards. Moreover, CXMT’s DDR5 memory supports a diverse range of form factors—seven in total—including those for desktops, laptops, and standard data centers, covering full-scenario applications such as personal computers, workstations, servers, and data centers.

LPDDR5X memory is more commonly used in consumer electronics, with maximum speeds reaching 10667 Mbps, along with variants at 9600 Mbps and 8533 Mbps. The maximum single-die capacity is 16 Gb (2 GB), with options also including 12 Gb (1.5 GB). Package capacities offer multiple solutions such as 12 GB, 16 GB, 24 GB, and 32 GB.

Currently, CXMT’s LPDDR series memory has already been integrated into domestic smartphone brands. Leveraging the large-scale shipment of Chinese consumer products, the advantages of Chinese memory chips in terms of market scale and manufacturing costs are becoming increasingly evident.

Global Supply Chain

In 2022, the United States prohibited its companies from using memory chips from Chinese enterprises without permission. Apple had considered using YMTC’s flash memory chips but ultimately abandoned the plan due to pressure from the U.S. government.

According to a Kioxia management representative speaking to Nikkei, Japanese companies are not enthusiastic about using Chinese memory chips due to concerns over quality and safety. Even if Chinese chips are significantly cheaper, Japanese firms will prioritize using domestic memory chips and will not consider Chinese alternatives.

Japan once relied on a government-promoted VLSI (Very Large Scale Integration) project to achieve collaborative development across the chip industry chain, enabling Japan’s semiconductor sector to become fully integrated—from basic materials to manufacturing equipment.

Nikon and Canon leveraged this to defeat American competitors GCA and PerkinElmer, becoming giants in the lithography machine market. Toshiba (the predecessor of Kioxia), relying on the local supply chain, produced large quantities of cost-effective, high-performance, and stable memory chips, surpassing Intel. Companies like Sony and Panasonic also ventured into product manufacturing, selling a vast array of Japanese-made semiconductor products globally, including to the U.S. market.

Today, China’s memory industry is leveraging the economies of scale from consumer products to gradually expand its market share.

According to data from American research firm IDC, China’s total smartphone shipments in 2024 reached 286 million units, a year-on-year increase of 6%, accounting for 23% of global shipments. The Chinese market represents 20% of Kioxia’s total sales. If Chinese brands choose to adopt domestic memory chips for product manufacturing in the future, it would pose a significant impact on memory companies from Japan and South Korea.

An analyst from an international semiconductor association commented that despite the U.S. targeting Chinese companies, China’s memory industry development has not stagnated; its technological level and production yield continue to improve.

If current trends persist, it is only a matter of time before international companies adopt Chinese memory chips. Chinese chips perform excellently and are affordably priced—at the same speed, no one prefers more expensive products. However, Japanese media state that even if Chinese chips are sold at much lower prices, Japanese companies will not prioritize them.

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