HEFEI, China Yangtze River Storage Technology, a Chinese government-backed company also known as Changjiang Storage, is in talks with overseas memory chip makers, including U.S.-based Micron Technology about partnerships aimed at expanding its foothold in the global market.
"We are talking with Micron, as well as other companies, to license their technologies," Ding Wenwu, vice chairman of Changjiang Storage, told the Nikkei Asian Review on Nov. 17 on the sidelines of a semiconductor forum in the central Chinese city of Hefei, one of the country's chip technology hubs.
Micron is the world's No. 4 NAND flash memory chip maker, with a global market share of more than 10%, behind South Korea's Samsung Electronics with 36%, Toshiba of Japan with 20%, and Western Digital of the U.S. with 16%, according to Taipei-based research company TrendForce. Micron is also the world's third-largest DRAM maker, accounting for around 19% of global output, behind Samsung and South Korean chipmaker SK Hynix.
Ding added that his company is trying to develop both NAND flash memory and DRAM technologies. NAND flash and dynamic random access memory, or DRAM, are memory chips -- key components in a wide array of electronic devices.
The move by Changjiang Storage, the memory arm of state-backed conglomerate Tsinghua Unigroup, is linked to Beijing's drive to create a domestic chip industry and reduce its dependence on foreign technology. The effort springs from both economic and security concerns.
Tsinghua Unigroup set up Changjiang Storage in July. The unit is responsible for managing the group's growing memory business, following Tsinghua Unigroup's acquisition of a majority stake in Wuhan Xinxin Semiconductor Manufacturing, or XMC, earlier this year. Previously, XMC had a partnership with U.S. flash-memory provider Spansion. Changjiang Storage will also build plants based on government guidance.
BIG BACKERS The company has attracted other high-profile investors, including China Integrated Circuit Industry Investment Fund, where Ding serves as the president, and an investment unit tied to China's Hubei Province.
Ding's fund, a Beijing-led financing vehicle aimed at developing a domestic chip industry, began with 138.72 billion yuan ($20.1 billion) in capital. That figure is expected to grow to $1.2 trillion yuan over a decade, including contributions from both local governments and private investors.
Changjiang Storage has also approached Toshiba, Western Digital's SanDisk, Samsung and SK Hynix over possible partnerships, according to Ding. He added the talks are not limited to licensing, saying foreign companies may have the option to form joint ventures with Changjiang Storage or to invest in the company.
However, the U.S.-China Economic and Security Review Commission, a U.S. government advisory body, recommended on Nov. 16 that Congress block Chinese state-owned enterprises from buying or gaining control of U.S. companies. That will make it difficult for companies from the world's top two economies to forge partnerships.
"In the global memory sector, Micron is probably the most approachable for Chinese companies, as the U.S. memory maker may need capital to build more facilities," said Sean Yang, research director at DRAMeXchange, a market research specialist. "However, if the U.S. government intervenes, this will no longer be a pure business deal but there will be political factors at play."
Changjiang Storage seems to be aware of the growing sensitivity surrounding China's efforts to acquire foreign technology. Soon after the NAR published a story online based on Ding's remarks, Tsinghua Unigroup said in a statement that it has not spoken with Micron or any other company about potential collaboration.