China’s DRAM Ambitions. As A Convoluted & Tangled Web Unfolds, We Remain Resolutely Bearish.

 

19 Jun 2019 

Tensions created by the stalled US-China trade talks along with the recent US embargo on selling to Huawei has shone a spotlight once again on China's efforts to design and manufacture its own supplies of key electronic components, most notably DRAM and NAND. To that end, a recent report in the Nikkei Asian Review tells us that a Chinese company founded in 2016 is about to become the country's first mass producer of locally designed memory chips, set to compete in DRAM with the likes of Samsung, SK Hynix and Micron. That company is Changxin Memory Technologies (CXMT), previously known by a plethora of other names including Innotron, Hefei Rui-Li and Hefei Chang Xin.

The report quotes CXMT CEO Zhu Yiming as saying last month that CXMT's DRAM design was recently modified and is now based on technology from Qimonda, a descendant of German chipmaker Infineon that filed bankruptcy in 2009. Apparently, this was in an effort to avoid the fate of another aspiring Chinese DRAM manufacturer, Fujian Jinhua, which was indicted by the US authorities on charges of IP theft back in November 2019.

On the surface, this sounds plausible and quite sensible. However, the reality is China's path to developing its own DRAM technology base is a tangled and convoluted web which does not bode well for its future success and leaves us resolutely bearish. Here's why.