A Chinese state-backed semiconductor startup said it has started mass production of the country’s first locally designed dynamic random-access memory (DRAM) chip, China Securities Journal reported on Monday.

Why it matters: The move marks a major step for China’s push for complete self-reliance in semiconductors amid an ongoing trade war with the United States, but experts are skeptical about whether homegrown players can challenge memory chip giants such as Samsung and Micron in the $100 billion-per-year market.

DRAM chips are widely used for storage in personal computers, servers, and mobile devices.

The global DRAM chip market was worth some $99.65 billion in 2018 and is dominated by South Korea’s Samsung, which held 42.7% of the market in the first quarter. SK Hynix held 29.9% and US firm Micron 23.0% share of the market during the same time period, according to data from market researcher Trendforce.

In an effort to boost the country’s semiconductor industry, the Chinese government will encourage domestic companies to use locally designed DRAM chips, Stewart Randall, head of electronics and embedded software of Shanghai-based consultancy Intralink, told TechNode on Monday.

Locally designed and produced DRAM chips may sell well in the Chinese market, but face obstacles in the overseas market because their technology still lags foreign competitors, Randall said.

Details: Changxin Memory Technology, a semiconductor startup founded in 2016 in the eastern Chinese city of Hefei, has started to mass produce its own DRAM chips, the company’s chairman and CEO Zhu Yiming said Friday at the World Manufacturing Convention in the city.

The company has invested around RMB 150 billion (around $21.1 billion) in the chip project, including $2.5 billion spent on research and development, as well as capital facilities, according to Zhu.

The company calls its new memory the 10-nanometer class, where circuits are 10nm to 19 nm wide. The DRAM chip is 18nm, while those from foreign competitors fall between 12nm and 16 nm.

The company said it has forecasted production capacity of 120,000 wafers per month in the initial phase, and expects to deliver them by the end of this year.

Context: Changxin is widely seen as the next potential target for Washington’s campaign to block Chinese firms’ access to crucial American technology, Nikkei Asian Review reported in June.