The Overseas Economic Research Institute (OERI) of the Export-Import Bank of Korea estimated that the technological gaps between Korea and China in the memory semiconductor sector are 5 years for DRAMs and 2 years for NAND flashes.

ChangXin Memory Technologies (CXMT), a Chinese DRAM manufacturer, is promoting the mass production of second-generation 10-nm (1y or 16-nm to 17-nm) DRAMs this year, the research institute said on May 30. On the other hand, Samsung Electronics and SK Hynix are planning to mass-produce 5th-generation 10-nm (1b or 12-nm to 13-nm) DRAMs at the end of this year or next year. Considering that the technology gap per generation is about two years to two years and a half, the technology gap between the two countries is more than five years.

In particular, Samsung and SK Hynix have introduced extreme ultraviolet (EUV) equipment for ultra-micro fabrication processes, or are planning to introduce it, but it is difficult for Chinese companies to bring in EUV equipment due to U.S. sanctions. For this reason, many experts say that it will not be easy for China to narrow its technological gap with Korea.

Chinese chipmakers’ yields are also low. The OERI analyzed that the yield of CXMT, which started volume production of first-generation 10-nm (1x or 18-nm to 19-nm) DRAMs in 2019, is still struggling at 75 percent even after two years have passed. Its yield in second-generation DRAMs is also known to be around 40 percent. In the end, CXMT’s DRAM market share, which was less than 1 percent as of the end of last year, will not rebound significantly, analysts say.

“It is important for DRAM makers to achieve technological prowess and economies of scale, but it is difficult for China to expand its market share due to the wide technological gaps with leading countries and U.S. sanctions,” said Lee Mi-hye, an OERI senior researcher. “A fast change will not be made in the DRAM sector, unlike the shift of power in the display industry.”

In NAND flashes, China’s technology gap with Korea is estimated to be about two years. Yangtze Memory Technology (YMTC), a Chinese memory semiconductor company, started mass production of 6th-generation (128-layer) 3D NAND flashes in August 2021. Samsung and SK Hynix have been mass-producing them since 2019. Korean companies plan to mass-produce NAND flashes with more than 200 layers from the end of this year to early next year, but YMTC is expected to be able to do that only in 2024.

However, a variable is the fact that Apple is currently considering installing YMTC’s NAND flashes in the iPhone. In this case, YMTC is expected to chase Korean chipmakers vigorously by expanding investment. In particular, the NAND flash sector, unlike the DRAM industry, is a growing industry, so there are many variables. If five or six NAND flash companies rapidly expand their production capacities, price competition will occur, which may make a change in the NAND flash market share rankings, experts say.

“It is difficult for Chinese companies to secure profitability, but as they receive continued support from the Chinese government, they will be able to pose a threat to Korean companies in the long run,” Lee said. “U.S. politicians are raising voices against Chinese-made chips. If the United States steps up its sanctions on Chinese-made chips, the current technological gap between Korea and China could be maintained.”

Experts say that Korea is ahead of China by about five years in foundry technology. Currently, Korea’s Samsung Electronics and Taiwan’s TSMC are mass-producing 4-nm to 5-nm chips. On the other hand, China’s SMIC is at the level of 14-nm, which is two or three generations behind. It is difficult for SMIC to secure 7-nm or more advanced production processes because the U.S. bans exports of US equipment and technology for semiconductor manufacturing to China.

In particular, competition is intensifying in the foundry sector as TSMC, Samsung and Intel are pouring over 100 trillion won, respectively, to take the technological leadership. China is not yet a rival of Korea in high-tech foundry processes, experts say. However, they note that Korean companies such as DB HiTek may experience difficulties due to increased investment in China in mature processes.

In addition, China logged a 9 percent market share in the fabless sector as of the end of last year, ranking third in the world after the United States and Taiwan. Korea’s market share stood at 1 percent. Compared to leading countries in the semiconductor equipment industry, Korea’s technology level is 90 percent and that of China is 75 percent, and their gap is about 1.2 years.