YMTC has been included in the entity list by the United States, and may fade out of the 3D NAND Flash market after 2024.

(Schematic, Bloomberg)

[Reporter Hong Youfang/Hsinchu Report] TrendForce released an investigation report today (16th) stating that the U.S. Department of Commerce officially included China’s Yangtze Memory Storage (YMTC) on the Entity List on December 15th. All imports, re-exports, or transactions of American goods must be approved by the U.S. Department of Commerce. This will make it difficult for YMTC to purchase technical support and equipment parts from US equipment manufacturers, limit the possibility of bit growth, and may cause YMTC to be in the U.S. After 2024, it will fade out of the 3D NAND Flash market.

Micron and South Korea's SK Hynix announced the launch of 232-layer and 238-layer stacked NAND Flash products. Yangtze Memory also announced this year that it will compete with high-end NAND Flash technology. It has previously announced the development of 232-layer 3D NAND Flash, which has attracted the attention of the industry.

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TrendForce pointed out that YMTC has lost the support of equipment manufacturers, and the company's innovative adoption of Xtacking 3.0 in 128L and 232L production yields will be greatly challenged. Its 2023 NAND Flash supply bit supply will be revised down again, from the original estimated bit The annual growth of yuan supply is 60%, and it will be revised down to an annual increase of 18%. After considering the impact of being included in the entity list, it will be further revised down to an annual decline of 7%.

After Yangtze Memory was included in the Entity List, in addition to the impact on output, TrendForce observed that the attitude of non-Chinese customers towards the adoption of Yangtze Memory technology has become more conservative. At present, American smartphone customers have postponed the purchase of the company's NAND Flash products At the same time, the PC foundry, which was already verifying the client SSD product of YMTC, also suspended the import operation.

According to TrendForce's research, the future development of YMTC's storage business may be limited to China, and the transfer of high-level manufacturing processes will be greatly restricted. It is expected that opportunities for capacity expansion and market share will gradually be lost.

In addition, after YMTC is included in the Entity List, if the U.S. equipment control is extended to DUV equipment in the Netherlands and Japan, it will be difficult to obtain key equipment. TrendForce believes that after 2024, when the mainstream 3D process of other NAND Flash manufacturers generally enters the 2XXL generation , and even have the opportunity to mass-produce nearly 300L NAND Flash products, YMTC will gradually lose its cost competitiveness due to process stagnation, and its market share will continue to shrink.

In addition to continuing to seek removal from the entity list in the United States, the company will not rule out the possibility of returning to the production of 2D NAND or transforming into a mature process logic IC supplier.

According to TrendForce, as YMTC’s bit supply in 2023 is revised down again to an annual decline of 7%, the growth rate of bit supply in the overall NAND Flash industry will also drop to 20.2%, and the annual supply and demand curve (Sufficiency Ratio) will increase from 3.6%. Converged to 2.3%.

In addition to the contraction of bit supply, TrendForce is optimistic about the future growth of demand for enterprise SSDs benefiting from price elasticity. It does not rule out the possibility that NAND Flash will be tight in the second half of next year. Brands may increase their stocking momentum as early as 2Q23. NAND Flash prices will then The possibility of a flat market has greatly increased. From the third quarter of next year, the average price of NAND Flash is expected to gain support and start to reverse upwards.

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