Kioxia warns of potential cost of US chip policy over China

Nice NAND industry you have there, would be a shame if something happened to it

Attempts to reorganize supply chains to cut out China and foil its attempts to build a high-tech chip industry will be costly and may simply cause the Middle Kingdom to redouble its efforts, says memory maker Kioxia.

The warning came in an interview [paywalled] with the Financial Times by Lorenzo Flores, vice-chair of Kioxia, formerly Toshiba Memory. Flores said China could retaliate against the recently announced US export controls by ramping up domestic investment in NAND as a long-term solution to its chip supply issues.

Washington's latest sanctions put a ban on the export of manufacturing tools used for advanced semiconductors, and also require any US citizen or entity to seek permission from the Department of Commerce for any involvement with chipmaking in China. The latter in particular has forced many tech companies to ask US passport holders in key technical positions to leave the company in order to comply with the new rules.

But in the interview, Flores picked out in particular chipmaker YMTC, which was one of 31 Chinese firms to be added to the US government's Unverified List earlier this month and which is regarded as a potential rival to Kioxia.

"We've always viewed YMTC as a company that one needed to monitor or understand, and they were potentially an emerging competitor," Flores said.

While Kioxia might benefit from any chilling effect that US sanctions have on YMTC and its ability to produce high-end memory, Flores said that China is also expected to accelerate its development of domestic capabilities in response, which could pose a more serious threat in the longer term.

As we reported earlier this month, stocks in semiconductor companies were down following news of additional US measures amid fears that the US and China are now involved in an economic war that will affect global trade.

Kioxia is already cutting flash memory production in line with the worsening market conditions. The company announced at the end of September that it is making production adjustments that will see it reduce its wafer start production volume by approximately 30 percent.

Others making similar moves include Micron, TSMC, SK hynix and more, but Samsung has left its production expansion bleuprint unchanged in the belief that the chip sector will grow rapidly again in the not-too-distant future. ®