Tsinghua Poaches Talent to Aid China’s Faltering DRAM Industry

Article By : Alan Patterson

China’s Tsinghua Unigroup, may snatch a co-CEO from Semiconductor Manufacturing International Corp. (SMIC) to revive a plan to build a domestic DRAM industry.

TAIPEI — China’s Tsinghua Unigroup, the state-owned holding company that controls most of the nation’s semiconductor assets, may snatch a co-CEO from Semiconductor Manufacturing International Corp. (SMIC) to revive a plan to build a domestic DRAM industry.

According to media reports and to people interviewed by EE Times, Tsinghua aims to hire SMIC Co-CEO Haijun Zhao to head up a new DRAM company that would combine China’s fledgling memory makers, which are struggling to survive. Despite China’s multi-billion investment to build a domestic memory industry, it lacks much of the key intellectual property needed to compete in the business.

The imminent departure of co-CEO Zhao is “pretty much confirmed,” according to a source with first-hand knowledge of SMIC’s top management who spoke on the condition of anonymity to EE Times.

He isn’t alone. “We are hearing the same thing,” said a person in China familiar with the domestic semiconductor industry who also requested anonymity. “There is a larger platform at Tsinghua Unigroup. Unless SMIC can increase the pay for Zhao, I think he will leave.”

Zhao’s annual salary at SMIC is $400,000, according to media reports. The annual salary of Co-CEO Mong Song Liang is reportedly about half of Zhao’s.

The co-CEO model at SMIC also lacks a clear division of responsibility, the source in China added. Zhao and Liang have had difficulties getting along due to differences in background and management style, according to sources who spoke to EE Times. China's Sina news website has reported something similar. It said that owing to personal and professional differences between co-CEOs Zhao and Liang, relations between the two have been frosty.

Zhao has close ties with the Chinese government. Tsinghua Unigroup Chairman Zhao Weiguo has courted Zhao Haijun to run Unigroup’s planned DRAM operations in China, according to reports. The two Zhaos are unrelated.

The speculation on Zhao’s imminent departure prompted SMIC to issue a statement that said that Zhao and Liang remain co-CEOs.

“We condemn the media and individuals who fabricate and disseminate rumors,” Jenny Wu, a media spokesperson at SMIC, said to EE Times via email.

Tsinghua Unigroup

Tsinghua Unigroup is the largest chipmaker in China and the world’s third-largest supplier of mobile phone chips. The holding company has recently acquired a number of companies in chip design, memories and assembly and test, including Spreadtrum (which last year was renamed Unisoc).

Tsinghua is the third-largest shareholder in SMIC after Datang Telecom and the China National IC Industry Investment Fund.

Tsinghua Unigroup may need Zhao to rescue China’s fledgling memory industry.

In 2016, Tsinghua started construction of memory fabs in Wuhan, Nanjing and Chengdu, with a total investment of nearly $100 billion. At the beginning of 2017, Tsinghua invested $30 billion to build a base in Nanjing, mainly producing 3D-NAND flash and DRAM memory.

The Nanjing fab, however, has yet to be built. Local reports from China say that “after completion, it will be China's largest chip manufacturing plant, with a monthly output of 100,000 12-inch wafers.”

Tsinghua Group has hired a number of well-known industry executives recently as it aims to scale up semiconductor production, according to a March 9 report on Sina. Recent hires include former United Microelectronics Corp. (UMC ) CEO Shih-Wei Sun, former ZTE Executive Vice President Zeng Xuezhong and former HiSilicon Chief Strategy Officer Steve Chu.

Zhao is expected to resign soon and join Tsinghua, according to the Sina report. The report said the Tsinghua Group had no comment.

China’s DRAM Gamble

Decades into its long march to build a domestic semiconductor industry, China's efforts to get into the memory business have barely led anywhere.

Tsinghua Unigroup’s planned DRAM fab in Nanjing has been dormant, Handel Jones, the founder of International Business Strategies, Inc. (IBS), told EE Times. The key requirement for Tsinghua is access to DRAM IP, he said.

Tsinghua has also taken a stake in a DRAM venture known as XMC in the city of Wuhan.

While IBS expects the DRAM market to grow in 2020 after a decline in 2019, Jones told us, “I do not understand why China would commit $10 billion or more to a new DRAM fab.”

Despite the billions that China has invested in a domestic semiconductor manufacturing infrastructure to offset chip imports, it has so far had little success. China, which assembles electronic devices for companies ranging from Apple to ZTE, has the world’s largest semiconductor market.

The efforts of Innotron Memory and Fujian Jin Hua Integrated Circuit (JHICC) to ramp up memory production last year stalled.

Innotron Memory “is making progress but [has] a long way to go,” Jones said.

“Innotron Memory has yielded an initial sample, but the yield rate is very low, and it’s targeted at legacy DRAM,” according to a U.S. executive in the memory industry who spoke on the condition of anonymity.

JHICC, meanwhile, is “effectively gone,” according to Jones.

Late last year, Taiwan’s United Microelectronics Corp. (UMC) shelved an R&D project with Chinese chipmaker Fujian Jinhua after the U.S. government ordered a ban on supplies of equipment to the company.

Because the original plan by JHICC called for UMC to provide all the baseline technologies, UMC’s withdrawal left JHICC with no choice but to strike out on its own. This proved to be impossible, and led to the company's collapse.

Jones noted that JHICC has some wafer processing equipment that they want to sell, and also a building that needs a new owner.

The demise of JHICC may have provided Tsinghua an opportunity to push for a grand consolidation of China’s memory makers, according to the U.S. source working in the memory industry. “If Tsinghua were to jump in, Tsinghua would try to persuade the central government to combine Innotron Memory and Wuhan/Tsinghua,” he speculated.

In the meantime, the Chinese memory makers are keeping a low profile.

“We were told that Innotron changed its name to CXMT (ChangXin Memory Technologies)” says Bill McClean, president of IC Insights. “Neither Innotron nor CXMT have a website that we can find. The only mention of CXMT on the web is from a LinkedIn page.”

SMIC’s Struggle

SMIC aimed for Zhao and Liang to help bring process technology at China’s biggest foundry on a par with larger rivals such as TSMC and Samsung. That plan has so far seen few results. The company’s most advanced production technology has languished at 28nm for years while TSMC and Samsung have pressed ahead to production at the 7nm node.

Hiring Liang, who joined SMIC as co-CEO in 2017, was expected to help SMIC with a leap forward in technology. He was instrumental in advancing process technology at TSMC, and then did the same for Samsung.

In August 2015, TSMC won a lawsuit in Taiwan against Liang after he joined Samsung. The court barred Liang from working for Samsung for a year.

The suspected leak of technology may have helped Samsung catch up and surpass TSMC in leading-edge 14-nm FinFET chips that foundry customers such as Qualcomm and Apple designed for next-generation mobile devices. When TSMC launched its 28-nm products in 2012, the company went unchallenged in that technology node for nearly two years.

After Liang joined Samsung in 2011, the company’s process technology leapt ahead to 14nm FinFET from a 32nm/28nm planar process with volume production at the end of 2014. Liang's hiring at SMIC attracted quite a bit of attention in the semiconductor industry, which wondered if he could guide a third company to technology leadership.

Currently, Liang is evaluating the possibility of heading up a new foundry in China with some of his former TSMC colleagues, according to the Chinese news media.

However, Liang is not likely to leave SMIC, according to the industry insider in China interviewed by EE Times.

The new company in China that Liang may join would initially invest 49 billion yuan ($7.3 billion) with a focus on advanced process development and production, according to the media. Monthly production would be up to 30,000 12-inch wafers for a 12 nm process and 10,000 12-inch wafers for 7 nm.

— Additional reporting by Junko Yoshida

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