Abstract:
YMTC, China’s largest NAND flash memory manufacturer, is further increasing the proportion of localized semiconductor production equipment. Reuters reported on November 6, citing two people familiar with the matter, that Yangtze Memory plans to increase the proportion of domestic equipment procurement to at least 60% in the fourth wafer fab built in Wuhan, with a target of even reaching 70%. This will be significantly higher than the current share of domestic equipment of slightly more than 50% in the company's third factory.
This plan not only reflects the acceleration of the localization process of Yangtze Memory's own supply chain, but also means that Chinese semiconductor equipment companies are expected to gain more opportunities to enter advanced memory chip production lines.
According to people familiar with the matter, Yangtze Memory's fourth factory is expected to start construction in 2027, and the location is still in Wuhan, where the company is headquartered. At present, the company has launched preliminary discussions with some domestic equipment suppliers, but has not yet formally issued equipment purchase orders. Therefore, the proportion of domestic equipment and the construction progress may still change.
The technology positioning of this new factory is quite clear: to produce advanced NAND flash memory chips with more than 300 vertically stacked layers. As memory cells continue to increase in the vertical direction, more storage data can be accommodated per unit chip area, thereby increasing storage density. Such high-capacity NAND products are particularly important for data centers, artificial intelligence servers, and enterprise-class storage devices.
Yangtze Memory plans to focus the production of its fourth factory on memory chips required for data centers and artificial intelligence applications. As the scale of AI models continues to expand, training data, model parameters, and data generated during the inference process require a large number of high-speed, large-capacity storage devices, and the importance of enterprise-level NAND flash memory has also increased.
If the fourth factory finally achieves mass production of more than 300 layers of NAND, Yangtze Memory's technological competitiveness in the Chinese market will be further enhanced. Reuters pointed out that this goal may even enable it to have more production technology layers in China than some overseas competitors.
For comparison, Samsung Electronics is switching its Xi'an factory to produce 286-layer NAND flash memory, while SK Hynix plans to upgrade its Dalian factory to more than 240 layers, an increase from the previous 192 layers. As U.S. export controls restrict the entry of some advanced semiconductor manufacturing equipment into China, the two South Korean companies also face additional restrictions on large-scale production expansion and technology upgrades in Chinese factories.
Yangtze Memory’s current position in China’s NAND flash memory market is rapidly improving. Data from market research organization Omdia shows that in the second quarter of 2026, Yangtze Memory's share of China's NAND market has reached 38.5%, higher than 28% in 2025, and has surpassed Samsung Electronics to become the NAND manufacturer with the highest market share in China.
The fourth factory’s equipment localization goal will also bring important opportunities to Chinese semiconductor equipment manufacturers.
Informed sources said that new domestic equipment orders are expected to be mainly concentrated in production links such as wafer cleaning, polishing and etching. These processes are indispensable basic steps in the manufacturing process of NAND flash memory. Chinese equipment suppliers have accumulated a lot of application experience in the existing production lines of Yangtze Memory.
Among them, Northern Huachuang and China Microelectronics are considered likely to benefit from new orders. The two companies respectively have a relatively extensive product layout in the field of semiconductor manufacturing equipment, especially in the areas of etching, thin film deposition and related process equipment, and continue to promote technology research and development.
In fact, Yangtze Storage has achieved a high degree of substitution of domestic equipment in some production links. Domestic suppliers are currently able to provide most of the cleaning and polishing equipment required for their production lines, and have made progress in the deep vertical structure process equipment required to manufacture advanced NAND chips.
However, localization does not mean that Yangtze Storage has completely got rid of its dependence on overseas equipment. For some more technically difficult manufacturing links, companies still need to use advanced equipment provided by foreign suppliers, especially in photolithography, inspection and other complex manufacturing processes.
These links involve extremely high technical thresholds. The equipment not only needs to have precision processing capabilities, but also must meet the stability and yield required for large-scale mass production of advanced memory chips. Even if domestic equipment can complete some processes, it does not mean that it can immediately completely replace overseas products in all advanced processes.
U.S. export controls are an important driving factor for Yangtze Storage to accelerate the substitution of domestic equipment. The U.S. Department of Commerce added Yangtze Storage to the Entity List in December 2022, imposing licensing requirements on U.S. suppliers selling specific technologies and equipment to it.
At the same time, factories operated by Samsung and SK Hynix in China are also affected by US export controls and require relevant authorizations every year to introduce US-made semiconductor equipment into Chinese factories. The U.S. government has also previously stated that it does not intend to approve the export of equipment that would allow these companies to significantly expand production capacity or carry out major technological upgrades in China.
In this context, Yangtze Storage's increase in the proportion of domestic equipment is not only a need for supply chain independence, but also an important arrangement to ensure that advanced factories can continue to expand production in the future.
It is worth noting that the fourth factory is not all of Yangtze Memory’s future expansion plans. Reuters previously reported in April this year that the company planned to build two more factories in Wuhan, bringing its total number of factories to five.
According to information provided by people familiar with the matter, the third, fourth and fifth factories are each expected to be able to process approximately 100,000 silicon wafers per month after they are fully put into operation. The three factories combined will give Yangtze Memory more than double its current manufacturing capacity.
This means that Yangtze Memory is advancing two strategic routes at the same time: on the one hand, it is expanding NAND flash memory production capacity by building new factories; on the other hand, it is reducing the impact of overseas technology restrictions on production and expansion by increasing the proportion of domestic equipment procurement.
However, the fourth factory is still in the planning and supplier contact stage. The actual mass production time of more than 300 layers of NAND, the proportion of localized equipment and the final production yield have yet to be verified later.
From an industrial perspective, the significance of this plan goes beyond Yangtze River Storage itself. In the past, Chinese semiconductor equipment companies mainly expanded their market share in mature processes and some basic manufacturing links, while Yangtze Memory is trying to introduce more domestic equipment into advanced 3D NAND production lines. If these devices can operate stably in large-scale mass production, it will provide important verification opportunities for domestic semiconductor equipment to enter application fields with higher technical thresholds.
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