China's top flash memory chipmaker targets more homegrown tools for new factory, sources say

ASML Holding

Today 04:00

China's YMTC targets 70% domestic equipment for fourth memory chip fab
Target is higher than at chipmaker's third fab, where just over half of its equipment is Chinese-made
Increased use of homegrown tools highlights growing self-sufficiency of China's top flash memory chipmaker
Some dependencies on sophisticated foreign-made tools remain 
Fourth fab to break ground next year in Wuhan, where YMTC is based 
Nov 6 (Reuters) - China's largest flash memory chipmaker, Yangtze Memory Technologies Co (YMTC), plans to source as much as 70% of the equipment for a planned fourth factory from domestic suppliers, two people familiar with the matter said.
The target would be a step up from the share at YMTC's third factory, which is due to begin operating later this year, where Chinese suppliers account for just over half of equipment purchases. The plan offers a fresh measure of China's progress in replacing foreign chipmaking tools. 
The planned fourth factory in Wuhan, where YMTC is based, is expected to make the company's most advanced NAND chips, with more than 300 layers of memory cells stacked vertically, the people said, speaking on condition of anonymity because they were not authorised to speak to the media.
The plant is expected to focus mainly on storage chips for data centres and artificial intelligence applications.
NAND flash memory retains data when devices are switched off and is used in smartphones, computers and data centres. Stacking more layers of memory cells vertically increases storage density, meaning it allows more data to be stored on a chip of the same physical size.
YMTC is targeting a domestic-equipment share of at least 60% at the new plant, with an ambition to reach 70%, the people said. Construction is expected to begin next year, though YMTC has so far only held preliminary discussions with suppliers and has not placed formal orders. 
The timing of the fourth factory and its domestic-equipment target are being reported for the first time.
The plans come as US export controls constrain YMTC's access to some American chipmaking technology. They also complicate efforts by South Korean rivals like Samsung Electronics 005930.KS and SK Hynix 000660.KS to expand capacity or make major technology upgrades at their factories in China.
YMTC's new plant would give it a higher memory cell layer count than its rivals are able to produce in China. Samsung is converting its Xian factory to make 286-layer chips, while SK Hynix is upgrading a Dalian facility to 240 layers or more from 192, Reuters previously reported.
YMTC's NAND market share in China rose to 38.5% in the second quarter from 28% in 2025, with the company overtaking Samsung as the top NAND maker in the country, according to data from Omdia, a market research firm.
YMTC, Samsung, and the US Commerce Department did not respond to a request for comment. SK Hynix declined to comment.

BOON FOR CHINESE EQUIPMENT MAKERS
The higher local-content target could benefit Chinese equipment makers including Naura Technology Group 002371.SZ and Advanced Micro-Fabrication Equipment 688012.SS, the sources said.
Most of the additional domestic orders are expected to come from workhorse stages of production, including cleaning, polishing and etching wafers, where Chinese suppliers have already proven their equipment on YMTC's production lines, the people said. 
Chinese firms already supply most of YMTC's cleaning and polishing tools and have made progress in equipment used to form the deep vertical structures required for advanced NAND chips.
YMTC nonetheless remains reliant on overseas suppliers for some sophisticated tools, including in lithography, inspection, and other advanced manufacturing processes.

US RESTRICTIONS DRIVE LOCALISATION
The US Commerce Department added YMTC to its Entity List in December 2022, imposing licensing requirements on US suppliers that were seeking to sell certain technology to the company.
Samsung and SK Hynix require annual US authorisations to bring American-made chipmaking equipment into their Chinese plants. Washington indicated last year that it did not intend to approve equipment that would allow the companies to substantially increase capacity or make major technology upgrades there.
In April, Reuters reported that YMTC was planning to build two additional factories in Wuhan, giving the chipmaker a total of five. 
When fully operational, the third, fourth, and fifth factories are each expected to process about 100,000 silicon wafers a month, the sources said. Together, they would more than double YMTC's manufacturing capacity.


 (Reporting by Reuters staff; Editing by Eduardo Baptista and Thomas Derpinghaus)
 ((Eduardo.Baptista@thomsonreuters.com;))