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The Grudges and Complex Relationships Between Chinese and American Storage Chip Industries

From the import of the most advanced process chips to the introduction of precision equipment and senior technical personnel, the United States has employed a variety of means to restrict China's chip industry. However, when a product that is indispensable to the development of all walks of life is banned, there will inevitably be alternatives, and the domestic substitution process in the trust-creating industry has proven this point. The counter-effect of the ban policy is mutual; the technologies created by domestic manufacturers who want to find their own way to get rid of geopolitical risks have, in turn, attracted the attention of overseas peers.

Not long ago, after an interval of 8 months, Yangtze Memory Technologies Co., Ltd. (YMTC) once again filed a lawsuit against the American memory giant Micron in the United States District Court for the Northern District of California, accusing Micron of infringing on 11 of its patents. According to a summary by professionals in the semiconductor industry, the core of these allegations is that Micron's multiple 3D NAND Flash (flash memory) storage products, including different technological generations such as 96-layer, 128-layer, 176-layer, and 232-layer, cover key technologies such as chip structure and manufacturing methods, and also involve some DDR5 SDRAM (Micron's latest generation of high-bandwidth computer memory specifications) products.

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YMTC's demand is for the court to prohibit Micron from selling its memory in the United States and to pay patent usage fees. We will discuss the likelihood of the court's support in detail later, but first, let's analyze the grievances and specific technologies between the two parties.

This is not the first time YMTC has taken Micron to court. In November last year, also in the United States District Court for the Northern District of California, YMTC sued Micron Technology and its wholly-owned subsidiary Micron Consumer Products Group for infringing on 8 of its 3D NAND-related patents. Insiders at YMTC believe that Micron used YMTC's patented technology without authorization, essentially to force YMTC out of the 3D NAND market to prevent competition and innovation.

The reason why YMTC has stood in opposition to Micron also stems from the new export control regulations for NAND storage chips involving 128 layers or more that the United States introduced in 2022.

According to a semiconductor researcher at Counterpoint, one of the biggest impacts of the new regulations is on YMTC's expansion and the maintenance of its current production lines. "YMTC has already achieved 232 layers in 3D NAND storage chips, while the representative of the international advanced level, Samsung, has only reached 236 layers in their 3D NAND. The gap is not significant, but the restrictions on the procurement of equipment and materials will slow down YMTC's pursuit."The driving force behind the United States' meticulous regulatory rules is likely the most "favored" semiconductor hardware company in the U.S. — Micron Technology.

Yangtze Memory Technologies, established in 2016, is one of the leading enterprises in the domestic storage chip field in China. It is jointly formed by Unigroup and Wuhan Xinxin, mainly focusing on NAND business. As early as 2021, it began mass production of 128-layer 3D stacking products, and the 232-layer products also started to increase in volume before the new regulatory rules. Chip industry practitioners generally believe that, from a technical standpoint, Yangtze Memory Technologies is already capable of competing with international storage giants such as Samsung and SK Hynix, with "at most one generation gap" between them.

Due to network security risks, Micron failed to pass the review by the Cyberspace Administration

However, Micron's experience in the Chinese market has been less than satisfactory. In May of last year, the Cyberspace Administration announced that upon review, it was found that Micron's products posed significant network security risks and threats to the supply chain of China's critical information infrastructure, affecting national security. The announcement specifically mentioned that "operators of critical information infrastructure should stop purchasing Micron's products in accordance with regulations."

It is important to note that China is Micron's third-largest global market, with customers in mainland China and Hong Kong alone accounting for a quarter of Micron's total global revenue. Micron cannot afford to be indifferent. On the other hand, the market space left by Micron's retreat will naturally be filled by Yangtze Memory Technologies, which has its own independent intellectual property rights and lower technical and patent risks. The reason why Yangtze Memory Technologies can avoid Micron's patent protection zone and even make Micron covet its technology is due to its independently developed X-tacking stacking architecture technology.

02

New architecture methods become a focus

In the semiconductor field, NAND is short for NAND Flash Memory, also known as "Flash Memory," which is the flash storage we refer to. When our computers suddenly shut down and we restart them, some open software and articles being typed are still there, thanks to the existence of flash storage. Therefore, its scientific name is Non-Volatile Memory (NVM), commonly used in the manufacture of solid-state drives (SSDs), and applied to product terminals such as mobile phones, computers, and servers.The flash memory part in SSDs

Another currently major storage medium, DRAM (Dynamic Random Access Memory), is a type of volatile memory (VM). Simply put, when the power is turned off, the data stored disappears immediately. In a narrow sense, it can be understood as memory that is more inclined towards computation.

Returning to NAND Flash, it is also a non-volatile flash memory technology, first introduced by Toshiba (now Kioxia) in the late 1980s. It has a large capacity and fast rewriting speed, making it particularly suitable for the storage of large amounts of data. It is currently widely used, from SSD hard drives, USB drives to smartphones, tablets, digital cameras, smart cars, and more. There are also many competitors in this field, with SK Hynix, Micron, Intel, Samsung, and Western Digital being the main players.

Before the advent of 3D NAND technology, NAND was in a flat 2D form, with everyone building "bungalows" on a limited plane. However, when chip manufacturing processes reached the physical limit of 14 nanometers, the 2D structure of flash memory was prone to data loss due to electron leakage. This led to the emergence of methods to increase the number of vertical layers to obtain greater storage capacity.

The theory is clear, but in practice, the "shape" or architecture adopted by each company when building is not entirely the same. 3D NAND consists of the cells responsible for storing data, which are the storage arrays, and the circuit areas that drive these cells, known as peripheral circuits (Peri). The traditional manufacturing process involves first producing the peripheral circuits and then processing the internal storage cell arrays. This can lead to the high temperatures and pressures used in later processing damaging the previously manufactured peripheral circuits.

X-tacking technology is a significant breakthrough by Yangtze Memory Technologies

However, Yangtze Memory Technologies' X-tacking architecture technology separates the peripheral circuits and the storage array circuits, processing them on two independent wafers. This means that the peripheral circuits do not need to withstand the high temperatures and pressures during the array processing, allowing them to keep pace with the advancements in logic circuits. The "Wafer-to-Wafer bonding" technology is then applied for keying and packaging.

Some manufacturers also place the peripheral circuits below the storage arrays, which can increase storage density, but compared to this, the X-tacking architecture offers a greater increase—its area utilization rate can reach 90%. The significant increase in storage density means that the cost per storage unit is reduced, thereby lowering the production cost of SSDs. According to analysts from the industry professional organization Toms Hardware, Yangtze Memory Technologies is "disrupting" the SSD market.

In summary, it is precisely due to its unique X-tacking architecture technology that Yangtze Memory Technologies has been able to break the technological monopoly of international giants, achieving faster, larger capacity, and lower cost flash memory chip production. This might also be the reason why Micron is interested.Conditional settlements may be more important than compensation.

Will Yangtze Memory really engage in a "cutthroat" legal battle with Micron? Most likely not. Based on experience, a settlement is the most probable outcome.

A domestic GPU manufacturer told a reporter that patent disputes are very complex, and the semiconductor manufacturing process involves more than 600 steps. It is difficult for a single company or even a country to cover everything. "Everyone is in a symbiotic relationship. Whether it's patent infringement or reputation issues, as long as the commercial interests are balanced and an agreement is reached, that's the best outcome."

Micron and Jinhua, an integrated circuit manufacturer in Fujian, China, once sparked a global lawsuit war over DRAM-related technology. After six years, they also reached a settlement agreement and withdrew all their lawsuits.

However, after facing intellectual property litigation from Micron, Jinhua once ceased operations and only resumed production quietly last year. Yangtze Memory is different; its technology is different from that of other major NAND manufacturers, and it has its own exclusive patents. It is in a dominant position in the lawsuit, and what it can gain in the game is what Yangtze Memory should focus on.