YMTC may be forced to abandon the 3D NAND Flash market following US sanctions

YMTC may leave the 3D NAND market by 2024 after the US government placed the Chinese company on the Entity List 

The US Department of Commerce has formally placed the Chinese NAND manufacturer YMTC on their Entity List, which means that they will now be reviewing the exports of equipment, technologies, and other goods to the company from the US. This move will restrict YMTC’s ability to purchase new equipment and to maintain its existing equipment, limiting YMTC’s ability to improve the 3D NAND Flash technology and their ability to increase their NAND flash production rates. 

Over time, YMTC’s position within the NAND Flash market is expected to weaken significantly, especially if countries like Japan and the Netherlands join the US’ section regime and limit their own semiconductor exports to China.

YMTC now faces huge technological obstacles, as the company cannot simply replace US tech with Chinese counterparts. Additionally, companies outside of China are now wary of using NAND from YMTC, reducing demand from YMTC’s NAND. Moving forward, YMTC could become a NAND manufacturer that can operate only in Mainland China, at least according to Trendforce. 

Trendforce believes that YMTC could exit the 3D NAND Flash market by 2024, as US sections are expected to make the company unable to compete with their rivals. YMTC is expected to enter an era of technological stagnation, which should erode the company’s market share and force the company to explore other markets.  

In recent months the US has placed many Chinese companies on their Entity List and many of their allies are expected to put in place in the future. These sanctions are intended to limit China’s military applications of advanced technologies, but it does so by damaging China’s entire semiconductor market.

Moving forward, China will be forced to develop their own advanced semiconductor technologies to replace the technology that they can no longer source from elsewhere. In the sort term, this will destabilise China’s semiconductor market and place it behind its rivals, but in the long term it could make China more self reliant and resistant to sanctions. The question now is, how long will it take for China to develop home grown technologies that can rival what’s available today from elsewhere, and if China has the finances and skill to develop these technologies anytime soon.

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