China's premier memory maker CXMT eyes producing flash for SSDs, report claims — 3D NAND research and development line rumored for its second manufacturing facility near Beijing

A new report claims Chinese DRAM champion CXMT is eyeing production of 3D NAND memory. Reuters reports, citing three people familiar with the company's plans, that CXMT intends to build a 3D NAND R&D production line at its second manufacturing facility near Beijing. There is no information on when the experimental production line will become operational, though, given that CXMT's second Beijing fab has not even broken ground yet, the line is at least two or three years away. In addition, the memory maker has established a research institute in Beijing that has NAND flash development among its projects, according to one source. CXMT has not formally confirmed any 3D NAND initiatives, so the information should be taken with a grain of salt.

For now, there are no details on CXMT's 3D NAND architecture, number of active layers, process technology, expected performance, or production capacity. Nevertheless, the report claims that CXMT has already discussed its NAND ambitions with prospective customers. One of them is said to be a recently established company that plans to use CXMT-made NAND devices in storage products aimed at AI and supercomputing applications.

It remains to be seen whether CXMT's 3D NAND project will eventually progress to high-volume manufacturing, but if it does, the initiative will take CXMT beyond its traditional DRAM specialization and directly into YMTC's territory. Until recently, China's two major memory producers had focused exclusively on their 3D NAND and DRAM realms where they have achieved quite a success. Yet, it looks like both companies want to become one-stop shops for DRAM and NAND — just like their bigger rivals Micron, Samsung, and SK hynix — as YMTC is reportedly exploring DRAM production.

While CXMT's alleged plan to build 3D NAND may look somewhat logical from business diversification point of view, it does not make a lot of commercial sense for now.

Or China's industrial policy?

CXMT is China's dominant DRAM producer and posted $22.41 billion in revenue and $11.57 billion in net profit in the first half of the year after years of bleeding money. Despite obvious success, the company is still considerably smaller than the Big Three memory suppliers, which means it has plenty of room to expand in the industry where it already has experience, process technology, fabs, and customers. Furthermore, AI gives CXMT an obvious reason to focus resources on advanced DRAM as well as HBM3E, which are arguably much more strategically valuable products than commodity 3D NAND.

That said, for CXMT, allocating resources to 3D NAND, which requires completely different process technologies, manufacturing expertise, and equipment, does not make much economic sense. However, from the Chinese government's perspective, turning CXMT into the country's second major 3D NAND producer fits almost perfectly within its semiconductor self-sufficiency plans.

CXMT was created with Hefei government money (which held a 37% stake in the company during its IPO) and received support from China's Big Fund, which means that federal and local governments retain control over the company and may shape its strategic decisions, which is exactly what they do. Whether or not CXMT can indeed become a decent 3D NAND maker is an entirely different question.

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