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Source: Times Finance Author: Wang Xia

On the eve of the climax of the U.S. stock earnings season, Micron, one of the giants in the semiconductor market, was sued.

Yangtze Memory Technologies recently sued Micron (MU.O) for infringing 11 patents covering a variety of Micron's memory chip products. This is not the first dispute between the two companies. Last year, Yangtze Memory Technologies sued Micron for infringing eight patents, asking the court to prohibit Micron from selling related products in the United States or paying patent licensing fees to it.

In 1978, Micron was founded in Idaho, USA. Nearly 40 years later, Yangtze Memory Technologies was "born" in Wuhan. In the semiconductor market, the survival time of a company often means the accumulation of technology, products, customers and funds. If "latecomers" want to break into the siege, they need to cross multiple thresholds such as technology, capital and scale.

Why does Yangtze Memory dare to challenge Micron?

Latecomers' odds

Yangtze Memory filed two patent lawsuits against Micron last year and this year, involving a total of 19 patents. Yangtze Memory believes that Micron's 96-layer, 128-layer, 176-layer and 232-layer memory chips and some DDR5 DRAM chips (Y2BM series) are suspected of infringement.

In the two lawsuits, Yangtze Memory's demands were basically the same, namely, requesting the court to prohibit Micron from selling related products in the United States and to compensate for infringement losses; if the court refuses to apply for a permanent injunction, Micron will have to pay it an ongoing royalty.

What are the chances of winning after two lawsuits?

"From the public information, these are core patents that are not easy to bypass for 3D NAND products, and Yangtze Memory has a greater chance of winning." Chen Wei, former chief scientist of an artificial intelligence NLP company and chairman of Qianxin Technology, told the Times Finance reporter that he believes that Yangtze Memory has formed a certain patent barrier after years of 3D NAND patent layout.

The patents involved mainly involve key basic patents such as 3D NAND memory array device structure and process technology, Xtacking (Yangtze River Storage patent technology) process technology, and NAND memory programming method. Chen Wei believes that "Micron is likely to seek a settlement in these two cases."

Regarding the relevant circumstances of the lawsuit, the Times Finance reporter further contacted Yangtze Memory Technologies and Micron Group, but Yangtze Memory Technologies said that it had no specific response at the moment, and Micron Group had not responded to specific questions as of press time.

Memory chips (also known as semiconductor memories) are memories that use semiconductor circuits as storage media. They are the core supporting hardware for consumer electronics such as smartphones, PCs, and AI servers.

Storage chips are divided into two types: flash memory and memory. Flash memory mainly includes NAND Flash and NOR Flash, while memory is mainly DRAM.

In the field of memory chips, Samsung, Micron, and SK Hynix are known as the "Big Three". Bloomberg data shows that Samsung Electronics, SK Hynix, and Micron Technology will account for 94.1% of the global DRAM market in 2021. In the field of NAND Flash, data from the China Business Industry Research Institute in 2023 showed that their market shares reached 32.7%, 18.4%, and 10.8%, respectively.

In the process of flash memory chip manufacturing, as the chip develops to a smaller size in the 2D plane, technical bottlenecks gradually emerge. When the size is too small, the mutual influence between each storage unit increases, which is prone to charge interference and data loss. To solve this problem, manufacturers turned to 3D NAND technology, which achieves the expansion of storage chips by stacking storage units in the vertical direction.

Founded in 2016, Yangtze Memory Technologies Co., Ltd. is the largest 3D NAND Flash manufacturer (flash memory chip manufacturing) in China. According to a research report by Minsheng Securities, by the end of 2020, Yangtze Memory Technologies Co., Ltd. had achieved a global market share of nearly 1%, becoming the NAND wafer manufacturer with the largest market share outside of the six major international manufacturers.

The latecomer

Why did Yangtze Memory Technologies, a latecomer, accuse Micron of infringement? This is closely related to Yangtze Memory Technologies' core weapon - Xtacking technology.

Before Xtacking was launched, 3D NAND on the market was mainly divided into traditional parallel architecture and CuA (CMOS under Array) architecture. Compared with the previous architecture, Xtacking can process peripheral circuits and storage units on two independent wafers, and then combine them into one after the two wafers are completed. According to Yangtze Memory's official statement, this technology can shorten product development time by three months and production cycle by 20%.

In November 2022, the US semiconductor information website TechInsights published an article using words such as "amazing" to describe the mass production of Yangtze Memory's 232-layer flash memory particles. TechInsights said that this is the first 3D NAND retail solution with more than 200 layers in the global market, earlier than Samsung and Micron.

Who is Yangtze Memory Technologies Co., Ltd., which has come from behind?

In July 2016, Yangtze Memory Technologies Co., Ltd. was officially established based on Wuhan XMC.

The following year, Yangtze Memory designed and manufactured China's first 3D NAND Flash chip, breaking through 32 layers, and achieved its first tape-out. In 2018, the first generation of 3D NAND flash memory was mass-produced, the second generation of 3D NAND flash memory was first tape-out, and the Xtacking architecture was also released that year. In the same year, Yangtze Memory's total investment reached US$24 billion.

In 2019, Yangtze Memory mass-produced 64-layer 256 Gb TLC 3D NAND flash memory based on the Xtacking architecture, which is China's first 64-layer 3D NAND flash memory. The third-generation TLC 3D NAND (X2-9060) design was completed and the first tape-out was achieved.

In 2020, Yangtze Memory successfully developed the third-generation QLC 3D NAND (X2-6070), with a stack number of 128 layers. In the same year, the company's consumer-grade SSD was launched on the market, and the eMMC/UFS embedded storage passed the verification smoothly.

In 2021, the third-generation TLC/QLC NAND (X2-9060/X2-6070) developed and manufactured by Yangtze Memory will be fully mass-produced and shipped for eMMC/UFS, and the first phase of the factory will achieve full production.

In 2022, in addition to the mass production of 232-layer flash memory particles, the company's system solution based on the third-generation NAND was launched on the market and the Xtacking3.0 technical architecture was officially released.

The current patent lawsuit between Yangtze Memory Technologies and Micron also involves patents related to the Xtacking process technology.

Advanced packaging and testing becomes the new match point

In addition to the Xtacking architecture, Yangtze Memory's new focus is advanced packaging technology.

Recently, Chen Nanxiang, chairman of the China Semiconductor Industry Association and chairman of Yangtze Memory Technologies, said in an exclusive interview with CGTN: The current (Chinese and American) chip semiconductor industry has obviously lost the most important thing when "Moore's Law" was effective in the past - "consensus."

"Because this is an era where applications are king. In the past, everyone focused on wafer manufacturing technology, but now we need the support of the latest packaging technology. For example, the current popular AI chips require the most advanced wafer manufacturing technology and the most advanced packaging technology. It can be predicted that one day in the very near future, the importance of packaging technology will probably exceed that of wafer manufacturing technology." Chen Nanxiang said in an interview.

From the perspective of the industrial chain, the upstream of the wafer foundry industry chain is IC design, the midstream is wafer manufacturing, and the downstream is packaging and testing.

Previously, the wafer manufacturing industry has always occupied a relatively large market share. According to a research report by Debon Securities, the value of wafer manufacturing accounts for about 19% of the entire semiconductor industry chain.

However, as the manufacturing process of integrated circuits has approached the size limit of semiconductor devices for normal operation, the pace of Moore's Law, which has been maintained for nearly sixty years, is gradually slowing down.

"Both internationally and domestically, we are beginning to seek to further enhance the computing power or storage capacity of chips through advanced packaging and integration technologies," said Chen Wei.

The latest data from YOLE shows that the global advanced packaging market is expected to continue to expand at a compound annual growth rate (CAGR) of 12.9% between 2023 and 2029, and the market size is expected to grow from US$39.2 billion in 2023 to US$81.1 billion in 2029.

This brings opportunities for Chinese companies, which already have certain advantages in the advanced packaging industry, to make greater efforts.

"Yangtze River Storage's Xtacking technology has accelerated product development and reduced overall costs. The company has actually benefited from advanced packaging integration technology," said Chen Wei.

In addition, Yangtze Memory has also made some arrangements in the field of packaging and testing. For example, Chipma Microelectronics (Shanghai) Co., Ltd., in which Yangtze Memory holds a 50.94% stake, provides a variety of semiconductor chip packaging and testing solutions, covering the packaging and testing of 3D NAND (Raw NAND, eMMC, UFS, eMCP), 2D NAND, NOR, DRAM, SRAM and other memory products.

SDIC Securities believes that the storage industry has undergone changes from “US-Japan-South Korea” and the next ten years will be the golden decade for China’s storage industry.

Chen Wei holds a similar view. "The memory industry is capital + production + technology intensive. Currently, only China, Japan and South Korea can provide the right product talents and technical talents." In his view, Chinese companies, backed by the domestic electronic industry chain, have better industrial customer demand and industrial collaboration advantages.