Rebirth 08: Rise from copycat phones

Chapter 613 Price War Among the Four Giants
On April 16th, in Tongcheng, Xu Shenxue held a semiconductor conference at the headquarters of Zhiyun Microelectronics Co., Ltd.

The meeting mainly focused on expanding the production capacity of existing 7nm and 5nm processes, as well as tackling key technological challenges for future 3nm and 2nm processes.

Logic chips are a field that Xu Shenxue pays close attention to, but it is not the only field he focuses on.

Xu Shenxue is also paying close attention to the field of memory chips... because the memory chip market seems calm at present, but a new round of large-scale price war is brewing.

The last price war in the memory chip market was two years ago, when Zhiyun Storage attempted to wage a price war by mass-producing its 10C process first. Four Star Semiconductor followed closely behind, attempting to join forces to suppress Hynix and Micron.

However, the move was too hasty, the funding was not adequately prepared, and most importantly, the capacity of the 10C process node was insufficient at the time, and the competitiveness of the 10B process was also relatively weak, ultimately resulting in poor results.

The price war resulted in a lose-lose situation for all four parties involved, and aside from the loss of profits for each party, it did not achieve any real effect.

And now, Zhiyun Storage is planning to do it again!
This time, they will be much better prepared!
The discussions at this semiconductor conference regarding memory chips were actually preparations for the next round of technology and price wars in the memory chip market.

In the flash memory sector, according to the meeting discussions, the focus will be on large-scale capacity expansion of mature 3D NAND flash memory chips with 100 to 150 layers, while also building large-scale mass production facilities for 3D NAND flash memory chips with more than 200 layers.

Although flash memory chips with more than 200 layers already exist, they are not currently mainstream due to cost and production capacity limitations.

The number of layers in mainstream memory chips, especially mid-to-high-end products, is between 100 and 150 layers. This mid-to-high-end market is also the core source of revenue and profit for the four major memory chip giants... and it is the strategic support for them to develop next-generation technologies and build next-generation process capacity.

If you can squeeze your competitors out of this market segment, it's like cutting off their supplies. They will fall behind in the research and development of new technologies and the construction of new production capacity... and then they can only play in outdated markets.

The semiconductor manufacturing industry is extremely brutal; falling behind even once means falling behind at every step.

The leaders can then reap substantial revenue and profits from next-generation technologies, thus creating a virtuous cycle!
This is how Zhuyun Group has accumulated its leading advantage in the logic chip field step by step!

Now, the same approach is being used in the memory chip industry!
Besides 3D NAND flash memory chips, another core product in the storage chip industry is RAM chips.

At the semiconductor conference, it was confirmed that the production capacity of the relatively mature 10C process memory chips would be further expanded on a large scale, requiring the production capacity of this core process to double again within two years.

To wage a price war, sufficient production capacity is a prerequisite... Otherwise, if production capacity is limited and supply cannot meet demand, what's the point of a price war?
While expanding the capacity of mature processes, we will further advance to the 10D process, namely the fourth-generation 10-nanometer process. The actual process node is planned to be 12-nanometer mass production. We are required to complete the technology verification this fall and start large-scale shipment next year!

The mature 10C process is the mainstay, directly engaging in large-scale price reductions to impact competitors' core business, causing their cash flow to dry up rapidly and leaving them unable to maintain the cash flow needed for the research and development and manufacturing of the next generation of processes!

The research and development and manufacturing of new processes are very costly!
At the same time, by using top-notch technology... the advanced 10D process, which competitors cannot catch up with in the short term, dominates the high-end market in order to maintain overall profits.

This is a combination of tactics, a dual approach of price war and technology war!
Zhiyun Semiconductor division really likes to attack its competitors like this... and most of the time it works quite well.

The 10D process plays a crucial role: to seize the high-end market and, when the profit margin of the 10C process rapidly declines, to use its own profits to revitalize the entire Zhiyun storage business!

Otherwise, if the 10C process is sold at a large price and profits plummet, there will be no way to recover the losses with the 10D process, which would be awkward.

10C and 10D processes are the process designations used by Zhiyun Group in the memory chip field. The actual process node of 10C process is 14 nanometers.

This is currently the most advanced mass production process in the world. This process appeared relatively early and once led Four Star Semiconductors... However, Four Star Semiconductors caught up in no time and did not maintain a technological advantage for long.

The current 10C process is the main mass production process for various high-end memory chips under the Zhiyun Group. In the past two years, many terminal products of Zhiyun Group have adopted this process for high-end memory.

Currently, the HBM3 high-bandwidth memory of Zhiyun Storage, a subsidiary of Zhiyun Group, which is the memory used in the APO6000 graphics card, is manufactured using this process.

The S-series phones under the Zhiyun Group, such as the flagship S20 Max Pro released last year, use LPDDR5 memory chips, which also adopt this technology... Zhiyun Storage's LPDDR5 high-performance and high-speed memory is also the top-of-the-line low-power memory at present, and its performance even exceeds that of Samsung's LPDDR5 memory products.

The reason for this is the superior performance provided by Zhiyun Microelectronics, the OEM manufacturer of LPDDR5 memory, with its 10C process.

The current 10C process is still the top-tier process in mass production, but of course, it can no longer significantly outpace the competition.

Because Samsung Semiconductor, Micron, and SK Hynix have all caught up and possessed this level of technology... Their technologies at the same level have their strengths and weaknesses, but overall they are at the same level and the differences are not significant.

Currently, Zhiyun Microelectronics is fully committed to advancing towards the more advanced 10D process in the field of memory technology, with a process node of 12 nanometers.

The process technology of Zhiyun Microelectronics' memory chips was initially divided into 30 nanometers, 25 nanometers, and 20 nanometers!

Later, after entering the 10-nanometer process era, the first generation adopted the 10A process, with an actual process node of 18 nanometers.

The second-generation 10B process has an actual process node of 16 nanometers.

The third-generation 10C process, with an actual process node of 14 nanometers... Starting with this generation of processes, Zhiyun Microelectronics began to use EUV lithography machines to manufacture some core processes of memory chips.

The fourth-generation 10D process actually has a process node of 12 nanometers...

The 10D process technology is extremely advanced, representing the most advanced memory chip technology in the world, bar none. Even Samsung Semiconductor would find it very difficult to catch up.

Moreover, this process requires very advanced equipment. Many steps in 10D lithography already require the large-scale use of the most advanced HEUV-300C lithography machine.

In the previous 10C process node, such a top-of-the-line machine was not needed; the HEUV-300B lithography machine was used, and it was only used in a small number of core processes.

The 10D process requires a more advanced HEUV-300C lithography machine and involves more steps... This means better performance, but also higher manufacturing costs.

The main reason is that the HEUV-300C lithography machine is expensive... This lithography machine is currently the highest-performing mass-produced lithography machine under Gulf Technology and is also the world's most advanced. Its 1.5-nanometer overlay precision can easily be used to manufacture chips with equivalent 5-nanometer/7-nanometer processes... This lithography machine is the main lithography machine used by Zhiyun Microelectronics for the large-scale manufacturing of EUV single-exposure processes now and in the future.

As for the older HEUV-300B, although its lithography performance meets the standards, its production efficiency is not good, with a capacity of only 120 wafers per hour, and it has now been discontinued... With the more advanced HEUV-300C available, Gulf Technology is no longer willing to continue producing HEUV-300B.

This is also related to Gulf Technology's own strategy. Because the production capacity of EUV lens groups is limited, and they can only produce such a small number of EUV lithography machines per year, they prefer to have customers purchase the most advanced, more expensive, and more profitable products.

Instead of using valuable EUV lens assembly capacity to produce mature, inexpensive products with lower profit margins.

Therefore, Gulf Technology sets a relatively high price for the HEUV-300B lithography machine, simply and directly telling customers: Don't buy this thing, buy the HEUV-300C instead!
In the end, the customer calculated that although the HEUV-300C was much more expensive, its overall cost-effectiveness was better, so they were not opposed to it.

Let alone Zhiyun Microelectronics, even SMIC is now purchasing HEUV-300C EUV lithography machines, but they don't have much money and buy very few.

The current HEUV-300C lithography machine is still quite good; it can be used to barely produce chips with an equivalent three-nanometer process. Zhuyun Microelectronics' first-generation three-nanometer process was made using this lithography machine.

Of course, it only initially meets the requirements of the equivalent three-nanometer process, and there are still some shortcomings in terms of yield and cost.

If we want to manufacture chips with equivalent 3-nanometer or even di-nanometer EUV double exposure processes better, faster, and at a lower cost, then we need a newer type, the HEUV-300D, which Gulf Technology has just completed the prototype development of but has not yet started supplying!

This is a top-of-the-line EUV lithography machine with an astonishing overlay precision of 1 nanometer, specifically developed for EUV double exposure processes.

If nothing unexpected happens, this will also be the ultimate product of the HEUV-300 series lithography machine... because at this stage, the wavelength of the light source can no longer be reduced, and the metal spacing of a single exposure is limited to about 26 nanometers, which is the limit for manufacturing five-nanometer processes with a single exposure.

To manufacture 3-nanometer processes, double exposure is required, which is also a major technological advancement of the 300D lithography machine. This further reduces the overlay precision, resulting in higher yield and lower cost for double exposure.

Then what about the 2nm process? The 1.5nm process? And the 1nm process?
Current EUV lithography machines aren't performing very well. What to do? Change direction and further reduce the minimum metal spacing of the lithography machine!
In lithography machines, there are several parameters that affect the precision of lithography. The other parameters have basically reached their limits in the DUV lithography era, while EUV lithography machines use the method of shrinking the wavelength to achieve technological progress.

Now that the technology for EUV light source wavelengths has been largely exhausted, the only remaining area for improvement is the 'NA numerical aperture' parameter.

In lithography machines like the HEUV-300 series, the numerical aperture is uniformly 0.33!

The next-generation lithography machine from Gulf Technology is designed to improve the numerical aperture, increasing it to 0.55 or even larger, thereby achieving smaller metal spacing.

Achieve the production of metal linewidths of 16 nanometers or even smaller in a single exposure!

This plan refers to the HEUV-800 lithography machine from Gulf Technology, a type of EUV lithography machine with a large numerical aperture.

The product numbers of Gulf Technology's lithography machines are all uniform and follow a regular pattern.

i-line lithography machine, serial number HI-100 series...

KRF lithography machine, model number HKRF-200 series
The DUV dry lithography machine is designated as the HDUV-400 series.

DUV immersion lithography machines that support double exposure are the HDUV-500 series, while those that support quadruple exposure are the HDUV-600 series.

The EUV lithography machine was developed because Xu Shenxue was focused on EUV lithography and started the project very early, even earlier than the DUV lithography machine. As a result, it obtained the HEUV-300 series number very early on.

Then, the nanolithography machine, which was initiated and developed a few years ago, used the designation HNIL-700.

The new generation of large numerical aperture EUV lithography machines uses the new HEUV-800 series designation.

The prototype of this new generation HEUV-800 lithography machine is estimated to be completed within the next two years. As for when it can be put into practical use, it depends on the subsequent research and development... but it is unlikely in the short term because this thing is too expensive. We need to continue to tackle technical challenges and bring down the cost, especially the manufacturing cost. Otherwise, the cost of using it in semiconductor manufacturing plants will be too high and unsustainable.

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The manufacturing of memory chips is actually somewhat similar to that of logic chips, and it also heavily relies on the performance of advanced lithography machines.

The 10D process was born thanks to the HEUV-300C lithography machine. Currently, engineers at Zhiyun Microelectronics are working overtime to solve the problem of large-scale mass production of the 10D process. If all goes well, the first memory chip using the 10D process will be available around this fall, and mass production will be possible around next spring!
At that time, Zhuyun Storage, a subsidiary of Zhuyun Group, will once again ignite a war in the high-end memory field globally...

This trend isn't limited to memory; it's also true in the flash memory sector. Zhiyun Storage is aggressively pushing for cost reductions in 3D NAND at the 100-layer and 150-layer process nodes… As costs continue to decrease, selling prices will also continue to drop… This means a price war!
This timeline is also scheduled for around next spring!
Zhiyun Storage is brewing a big move... attempting to simultaneously ignite a global war in the flash memory and memory chip sectors, impacting the entire storage chip market!

Since last year, Zhiyun Storage has been stockpiling cash flow, waiting for the 10D process to be mastered so that it can engage in price wars and technology wars in the memory chip field.

At the same time, price wars and technology wars are also being waged in the field of flash memory chips.

A two-pronged approach will directly lead to a massive war in the storage chip industry!

This time, they'll definitely cripple at least one memory manufacturer... It's unlikely they'll kill them outright, but it's possible they'll severely damage one of them and knock it out of the top tier.

In the current high-end memory chip market, there are companies like Zhiyun Storage, Hynix, Micron, and Fourstar Semiconductor... There are too many companies, and the high-end memory chip market is not enough to go around!

Four Star Semiconductor, located nearby, also noticed the unusual activity of Zhiyun Storage. However, they were also eager to make their move, waiting for Zhiyun Storage to launch the first attack. Four Star Semiconductor's storage technology has always been quite good. Although it is now slightly behind Zhiyun Storage, the gap is not large. Moreover, with Four Star Group as its parent company, it has ample funds.

Even at the very least, they can rely on the shipments of various products from Four Star Electronics to maintain continuous shipments in the mid-to-high-end market.

Four Star Semiconductor has similar characteristics to Zhiyun Storage/Zhiyun Semiconductor; both are backed by a huge smart terminal company... It's very difficult to kill them outright.

Once Zhiyun Storage initiates a price war in the storage chip field, Four Star Semiconductors will quickly follow suit... and lower prices as well!
Then, together with Zhiyun Storage, they will seize market share from Hynix and Micron.

In the field of memory chips, Fourstar Semiconductor and Smart Cloud Storage have always had a tacit understanding... They often agree to fight price wars and technology wars together, and then divide the market of other memory manufacturers.

Many years ago, there were many memory chip manufacturers around the world, with seven or eight that were well-known. Now, only four remain in the top tier. The others have either been acquired or have become second- or third-tier companies that focus on the low-end and mid-range markets.

This is all thanks to the years of market clean-up efforts by Zhiyun Storage and Four Star Semiconductor!
Now, they're planning to do it again!
At that time, semiconductor professionals worldwide will experience what a new memory chip cycle truly means...

Of course, this is great news for consumers and enterprise customers... The four major memory chip giants are waging a price war together, which means that the cost of purchasing memory chips for a large number of smart terminal manufacturers and other enterprises will decrease significantly.

Ordinary consumers will also find that memory modules and hard drives are much cheaper.

Moreover, barring unforeseen circumstances, the price of memory chips using mature technologies will continue to decline for several years!

In short, this time Zhiyun Storage will not stop until it crushes one of the companies... while Four Star Semiconductors is also confident that it can withstand this wave and seize market share from Hynix and Micron.

With these two top-ranked companies engaging in a price war, the third and fourth-ranked companies, Micron and Hynix, will also be forced to respond!

However, Hynix and Micron are lagging behind in technology, production capacity, and cash reserves, so it's hard to say whether they can withstand the pressure.

Actually, since the beginning of this year, both companies have noticed the ill intentions of their competitors... Flash memory chip prices have been declining recently, albeit slightly, but the decline is relentless!

Their strategy was actually quite simple: grit their teeth and persevere...

It's not about holding on until SmartCloud Storage or FourStar Semiconductor can't hold on anymore, but about holding on until one of Hynix or Micron dies.

For these two companies to survive, it's unrealistic to expect SmartCloud Storage and FourStar Semiconductor to collapse, as they are too large and their parent companies are too powerful... However, if one of Hynix or Micron dies, the chances are much higher.

Micron and Hynix are each other's biggest competitors!

If the third brother wants to survive, he doesn't necessarily have to kill the eldest and second eldest brothers; he just needs to run faster than the fourth brother.

Four of the world's leading memory chip giants are gearing up for a new round of price wars, each with their own agendas... However, the outside world hasn't reacted much yet, at most noticing a slight but continued decline in flash memory chip prices!
This is just the prelude to a price war among the four giants; the real large-scale price war is yet to come.

The semiconductor conference convened by Xu Shenxue this time focused largely on the upcoming price war in the memory chip market.

Of course, technological advancement and capacity expansion are necessary steps, and this would have been done even without a price war.

The price war was just a side effect.

For Xu Shenxue's various companies, squeezing out competitors is important, but maintaining their own technological progress is even more important!

The core products of all the companies under his management are waiting for more advanced 10D process memory and 3D NAND flash memory with more than 200 layers!

After a semiconductor conference, Xu Shenxue returned to Shenzhen. Not long after his return, Xi Wanqing, who had already started working at New Cloud Technology, became pregnant.

The problem is, Xi Wanqing has been with Xu Shenxue for several months now, but her parents still don't know...

(End of this chapter)