TAIPEI -- Taiwan's Silicon Motion Technology, the world's leading NAND flash controller chipmaker, is eyeing the next wave of growth opportunities in China, at a time when Beijing is pouring in funds to boost its own semiconductor industry.
Silicon Motion, which is listed on Nasdaq and based in Taiwan, supplies almost all the major global NAND flash memory providers, including Samsung Electronics, Toshiba, Western Digital, Micron, Intel and other storage product makers. It also works with Chinese emerging partners such as Yangtze Memory Technologies and UNIC Memory Technology -- both affiliates of state-backed tech conglomerate Tsinghua Unigroup -- to help test and qualify their products.
China has not yet produced any notable homegrown memory chip manufacturers. But Yangtze Memory has emerged as China's most high-profile contender to make NAND flash memory chips, and moved the first batch of equipment to allow it to do so in April. UNIC Memory does not manufacture its own chips, but has secured the supply of NAND flash memories from Intel for it to make into storage products, such as Solid State Storage devices or micro secure digital (SD) cards.
Wallace Kou, chief executive and president of Silicon Motion, said Yangtze Memory's development looked to be on track, and the newcomer could likely become a player in the market by 2020 if everything went smoothly. He spoke to the Nikkei Asian Review on the sidelines of the company's annual charity fair.
But Kou, a longtime industry veteran, added: "There might be some misunderstandings internationally about these Chinese newcomers in the memory chip segment. At this point, we don't think Chinese newcomers would intend to or be capable of destroying the market and putting memory chip giants like Samsung or Toshiba out of business. China just seeks to at least change the current imbalanced situation and at least have some control over such critical technologies."
Kou's comments came as the U.S. and China are negotiating to try and settle their trade disputes. U.S. President Donald Trump and Chinese President Xi Jinping discussed trade issues in a call on May 8 after high-level U.S. and Chinese officials in Beijing last week failed to reach a consensus, with talks set to resume next week in Washington.
Washington's moves to ban China's ZTE, a telecom gear maker, from using American technology and to investigate its bigger peer Huawei Technologies, are all viewed as a part of efforts to raise the stakes in the negotiations, said Kou.
Meanwhile, Kou said he expects the commercialization of the fifth generation or 5G wireless communication network by 2020 to boost the need for NAND flash memories. The 5G network, which could ensure higher-speed data transfer and low latency, or delay, is viewed as the key activator for future driverless cars, high-quality live-streaming videos, augmented reality and artificial intelligence applications.
"In the 5G era, there will be an enormous need to analyze, transfer, and store a great amount of data," said Kou. "We are really seeing a booming market for more consumption of memories after 2020."
Silicon Motion did not provide a breakdown of revenue by region, but said the Chinese market had grown the fastest over the past few years. The company's 2017 revenues totaled $523.4 million.
NAND flash memory chips, which control storage functions, are an essential memory component. Flash controller integrated circuits that support memory chips are used to activate and control storage functions in a wide range of electronic devices, including PCs, smartphones, data centers and electric cars.