SAN FRANCISCO — Chinese government-backed Tsinghua Unigroup has established a new DRAM unit in a renewed push to achieve semiconductor independence amid ongoing friction with the U.S.

The new memory unit is led by CEO Charles Kao, chairman of Inotera Memories and former president of Nanya Technology, both of which make DRAM. Kao is also chairman of Yangtze Memory Technology (YMTC), another Tsinghua Unigroup venture attempting to produce NAND flash memory.

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China’s stated goal is to domestically produce 70% of the semiconductors needed to supply its massive internal electronics markets by 2025. The country's push to bolster its domestic semiconductor production faces renewed urgency amid a trade war between the U.S. and China. Last month, the Trump Administration placed Chinese telecom giant Huawei Technologies, one of the largest companies in China, on an export blacklist preventing U.S. companies from supplying it with chips and other components. For the Chinese, the blacklisting of Huawei emphasized the importance of developing domestic supply sooner rather than later.

Another Chinese DRAM hopeful, Fujian Jinhua Integrated Circuit Company (JHICC), ceased DRAM development earlier this year. JHICC was placed on the U.S. export blacklist last year, preventing U.S. chip equipment firms such as Applied Materials and KLA-Tencor from supplying it with equipment, after it was indicted by the U.S. for alleged industrial espionage and intellectual property theft.

In March, EE Times reported that Tsinghua was looking to hire Haijun Zhao, the co-CEO of Chinese foundry Semiconductor Manufacturing International Co. (SMIC), to head up a new DRAM company that would combine China’s fledgling memory makers. However, Zhao has remained in his post at SMIC and does not appear to be associated with the new Tsinghua DRAM unit.

According to TrendForce, a Taiwan-based market research firm, the new DRAM unit will benefit from YMTC’s fab-building experience and Tsinghua’s relationship with subsidiary Unigroup Guoxin Microelectronics Co., which has also pursued DRAM development and may be assimilated into the new unit. Tsinghua is in the process of constructing a fab in Nanjing in Eastern China and is also working closely with Chongqing, another possible fab location, TrendForce said.

The firm said that the new group will likely rely on Kao’s experience and industry connections to develop DRAM process technology.

China's road to producing home-grown DRAM domestically has been strewn with obstacles, including the JHICC debacle. JHICC and partner United Microelectronics Corp. (UMC) had been developing DRAM in China but abandoned the project last year after they were indicted by the U.S. government for allegedly stealing IP from Micron Technology.

China’s first indigenous DRAM supplier, Changxin Memory Technologies (CXMT), is due to sample its first DRAM products by the end of this year. According to IC Insights, CXMT has a few thousand employees and a capital spending budget of about $1.5 billion per year. By contrast, IC Insights noted, memory chip giants Samsung Electronics, SK Hynix and Micron Technology each have more than 30,000 and the three companies spent a combined $46.2 billion on capital spending in 2018.

DRAM and flash memory accounted for 41% of China’s $155.1 billion IC market last year, IC Insights said. Although some reports indicate that China’s wafer fab output is quickly increasing and that technology advances — particularly in memory — will catch up with those from the leading suppliers, IC Insights said it completely disagrees.

“While China continues to make large investments in its memory manufacturing infrastructure and has developed some clever design innovations in an attempt to avoid potential patent disputes, IC Insights remains extremely skeptical whether the country can develop a competitive indigenous memory industry even over the next 10 years and come anywhere close to meeting its memory IC needs,” the firm said in a report.

IC Insights cited as a major issue that is often overlooked by observers is China's lack of indigenous non-memory IC technology. Currently, there are no major Chinese analog, mixed-signal, server MPU, MCU, or specialty logic IC manufacturers, IC Insights said.

These IC product segments, which represented over half of China’s IC market last year, are dominated by well-entrenched foreign IC producers with decades of experience and thousands of employees, according to the firm.