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China's new year's resolution: Build a flash fab

It wants to own all the chips at the table

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Blocks and Files China has no hard disk drive, DRAM and flash memory production facilities of its own – but that could change.

The Asian nation digs up the rare earths used to make components in the world's HDDs, and firms including Huawei and UIT make servers and storage arrays that use disk drives, DRAM and flash memory. However China has no indigenous concerns that make the core base storage technologies for enterprise-grade gear.

Setting up and operating semiconductor fabs and the integrated plants needed to manufacture disk drives costs billions of dollars and needs world-class expertise. However things could change and one indicator that they might is that a Chinese concern is now making processors derived from DEC's Alpha chip and others based on the MIPS architecture.

These are being used in supercomputer designs. It is generally accepted that China wants to control its own core technologies and cease dependence on the West, largely meaning non-Chinese Asia and the USA. Its own internal market should be large enough to support its own CPU designs, and if the State-backed companies made DRAM and non-volatile memories to international specifications, the country could sell silicon produced inside China to the rest of the world.

What is stopping it?

El Reg reckons that the main obstacle is expertise and technological know-how; the Chinese government is encouraging existing suppliers to set up plants in China and by extension skill up Chinese workers, managers, executives and component suppliers.

For example, Samsung is seeking to build a NAND fabrication plant in China.

Hynix, TSMC and SMIC already have semiconductor plants in China. In three to five years Chinese employees at these plant would have learned a great deal about DRAM and NAND flash foundry installation, operation, management and component supply. They will understand the steps in the technological processes involved, be aware of the logistical concerns and understand the financing and cost structures needed.

From then on, given sufficient financing and ambition, Chinese DRAM and NAND foundries could be established. They haven't been yet. It is feasible however, that a Chinese supplier such as Huawei could do this and we could, conceivably, see a Chinese NAND foundry operating from 2013 onwards, if they started building one now.

The same pattern of events and thinking could result in a DRAM foundry being established as well. However growth estimates for NAND flash sales are looking very attractive, as are technology roadmaps, and it may be that flash looks a better opportunity than DRAM, and also hard disk drives.

Will China jump into semiconductor manufacturing? At the high end of the technology spectrum it wants its own satellites and citizens on the moon. It could well have similar plans at the foundation technologies end of this spectrum. ®

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