Tsinghua Unigroup, a Chinese state-backed semiconductor conglomerate, made an announcement of forming a new business unit for manufacturing of DRAM, a type of memory chip having a technology that is largely dominated by the companies working in the United States and South Korea.
The announcement made through a single-line statement on Sunday came amidst Beijing trying boosting the chip industry in the country with more focus on its DRAM sector as China and the United States are in a battle over technology and trade issues and the move highlights the China’s dependency on key components which it mostly imports from other countries, especially from the United States.
For the Chinese companies, large scale production of DRAM, or dynamic random access memory, has particularly proven to be difficult, while 95% share of global DRAM market has been held only by three major companies Samsung Electronics Co Ltd and SK Hynix Inc which are based in South Korea and U.S.-based Micron Technology Inc.
To make DRAM, the Chinese conglomerate has already set out a unit namely Unigroup Guoxin Microelectronics Co Ltd, which is still not in a position to produce LPDDR4 at scale, as said the unit in its 2018 annual report.
LPDDR4 is the industry standard followed by the mobile phone makers in most of their devices.
It is also not clear that how the creation of a new unit will be affecting the operations of previously established unit of the conglomerate.
Tsinghua Unigroup, in 2017, has unveiled its intentions of building a facility in Nanjing by investing $30 billion to make DRAM and NAND chips but the plant is still under construction.
In 2017, China spent an amount of $260 billion on the imports of semiconductors from different countries which is more than the amount the country spent importing crude oil in that year.