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Chinese memory factories face funding problems
01.12.2021 [07:45],
Alexey Razin

Back in the middle of last month, it became known that the Tsinghua Unigroup holding controlled by the Chinese authorities could not timely pay off its debt obligations. This jeopardizes the timing of ambitious projects related to the production of RAM and solid-state memory chips in China.

Image source: AFP / Jiji

The fact is that the Tsinghua Unigroup holding oversees two projects important for the national industry of China. In Chongqing, a RAM chip manufacturing facility is under construction, but funding problems have slowed down preparatory work. The enterprise is now unlikely to be able to start serial production of RAM chips in 2022, as previously planned.

As the Nikkei Asian Review notes, citing its own sources, the situation is aggravated by staff shortages and technological problems, which also significantly slows down the project. Another problematic place is the Yangtze Memory (YMTC) enterprise for the production of 3D NAND memory in Chengdu, on the development of which it was planned to spend $ 30 billion. At first, it was planned to process up to 100 thousand silicon wafers per month, and then the production capacity was to triple. This would allow YMTC to take up to 20% of the solid state memory market in volume terms.

YMTC also faced a backlog of construction schedule, delays in financing the purchase of technological equipment. The essence of the problem faced by the Chinese semiconductor industry this year is the desire of local authorities to more sensibly approach the financing of specialized projects. Many Chinese companies in the sector are funded either by municipal budgets or from Beijing, but the central government has recently begun to criticize the behavior of regional officials, who sometimes mindlessly invest in a variety of projects. Tightening fiscal discipline has become a source of problems for Tsinghua Unigroup, which is funded primarily by government money.

There is no doubt that leading manufacturers such as SMIC and YMTC will not be left without financial support from the authorities, but it will be more difficult for smaller companies in China to survive from now on. US sanctions are also making adjustments to the agenda, and contract manufacturers of semiconductor components are becoming favorites in the eyes of the Chinese authorities. HSMC is trying to save the Wuhan administration from ruin, and Hua Hong Semiconductor can count on additional support from the Beijing authorities.

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