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Trade war

China's Tsinghua Unigroup to break ground on chip plant this year

DRAM designed in Japan by a team of 100 will help combat US sanctions

Tsinghua Unigroup in 2019 gained the consent of the municipal government of Chongqing for a DRAM chip plant in the city.   © AP

BEIJING -- Tsinghua Unigroup will start building a previously planned DRAM chip plant by the end of the year, sources told Nikkei, as China chases its goal of reducing reliance on overseas suppliers amid U.S.-imposed sanctions.

The major Chinese semiconductor maker seeks to begin mass-producing the dynamic random access memory chips, used in smartphones and other devices, sometime in 2022, the sources said.

The move comes amid an escalating confrontation between the U.S. and China over trade and other issues.

The plant will be built in the inland city of Chongqing.

Although Tsinghua Unigroup has not revealed the plant's annual capacity or how much it will invest, the sources said the company is considering a total investment of 800 billion yuan ($110 billion) in its DRAM operations over 10 years.

A subsidiary in Japan recently began operations with an intent to design the DRAM chips. Spearheaded by Yukio Sakamoto, the former CEO of Japanese DRAM maker Elpida Memory, the subsidiary will scout talent from other Japanese semiconductor companies.

Yukio Sakamoto, a heavyweight in the Japanese semiconductor industry, has been hired to lead the Japan unit of Tsinghua Unigroup.

"We aim to have a staff of around 100," Sakamoto, who is senior vice president of the group, told Nikkei in a phone interview.

Tsinghua Unigroup and the municipal government of Chongqing last August agreed on the project. The company had originally set a target of launching construction at the end of 2019 and kicking off mass production in 2021.

But delays hit, partly due to the novel coronavirus outbreak.

In 2015, Chinese President Xi Jinping unveiled Made in China 2025, a blueprint for upgrading the country's high-tech industries, and positioned semiconductors as a priority industry.

The Chinese leadership has set a target of boosting China's semiconductor self-sufficiency from less than 20% to 40% this year and then to 70% in 2025, supported by the growth of domestic semiconductor companies.

These efforts have produced some results.

HiSilicon, a subsidiary of telecom equipment giant Huawei, has grown as a designer of central processing units, semiconductors that serve as the brain of smartphones and other devices.

Yangtze Memory Technologies Co., or YMTC, under the umbrella of Tsinghua Unigroup, has started mass-producing NAND flash memory chips, which store information.

But no significant progress has been made in DRAM.

Jinhua Integrated Circuit Co., or JHICC, had planned to undertake popular-priced DRAM production. But its plan fell through due to a legal dispute over technologies and other matters.

ChangXin Memory Technologies, or CXMT, is mass-producing DRAM chips, especially for mobile devices, but is said to be facing quality and cost challenges.

If Tsinghua Unigroup is to produce internationally competitive DRAM chips, it will need U.S.-made manufacturing equipment. The intensifying U.S.-China confrontation, however, could hinder its ability to obtain this equipment.

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