The World Manufacturing Convention 2019 kicked off in Hefei on September 20. Among numerous attendees, local chipmaker CXMT (Changxin Memory Technologies, 长鑫存储), which has obtained CNY 150 billion (USD 21 billion) in funding since 2016, received a lot of attention on the first day of the event.
The company announced that it will start selling DDR4 DRAM, a domestically developed memory chip for mass production, by the end of 2019. CXMT itself is a homegrown project aimed at catching up with global industry leaders. It has been heavily funded by both state-backed organizations and independent businesses in the sector.
Meanwhile, as this news was made public, the stock price of one of the firm’s investors, Beijing-based flash memory chip developer GigaDevice Semiconductor (兆易创新, 603986:SH), soared 9%.
China imported over USD 300 billion of semiconductor materials, chips and integrated circuits in 2018. This number was an increase of nearly 20% from the previous year, indicating a higher-than-ever dependency on foreign microelectronics suppliers.
Triggered by the recent trade and tech tensions between the two biggest economies, countless projects in the semiconductor industry have been launched in China. Besides, the next step in the long-term capital market reform – the Shanghai Stock Exchange Star Market – was designed to resolve the exit overhang problem by facilitating local tech companies’ access to public financing.
In addition to capital injections issue, there are a handful of other challenges blocking the way to high-tech self-efficiency, of which the talent pool shortage is probably the most serious one. In 2018, CXMT made an attempt to hire a former top Samsung chip engineer. The move was blocked by the Korean company, which reportedly employed a number of legal tools, as such a nomination might affect its dominant position in the global market.
The global computer chip market is traditionally highly concentrated. At present, South Korean corporations Samsung and SK Hynix, together with American company Micron, make up 90% of the global DRAM market.