Chinese chipmaker's $4.9b IPO could accelerate enterprise SSD push, while adding pressure to commodity NAND prices

Seoul [South Korea], August 27 (ANI): Yangtze Memory Technologies, China's largest maker of NAND flash memory, has crossed a threshold where Samsung Electronics and SK hynix can no longer dismiss it as a low-end challenger, The Korea Herald reported on Thursday.
Yangtze Memory Technologies, China's largest maker of NAND flash memory, filed on Aug. 21 for a Shanghai initial public offering that could raise about $4.9 billion, less than two weeks after Counterpoint Research put it at 14 percent of global NAND shipments in the second quarter, level with Japan's Kioxia and behind only Samsung and the combined SK hynix-Solidigm group, The Korea Herald said in its report.
China's memory push had been drawing more attention through CXMT, its fast-growing DRAM maker. YMTC is now emerging as the NAND counterpart in a market rapidly shifting toward servers.
Samsung led global NAND shipments with 25 percent in the second quarter, followed by SK hynix and Solidigm at a combined 22 percent. YMTC and Kioxia each held 14 percent. (Counterpoint Research)
Enterprise solid-state drives absorbed 48 percent of all NAND bits shipped in the second quarter, up from 26 percent a year earlier. The Korea Herald quoted Counterpoint Research Director Hwang Min-sung as saying YMTC "plans to shift its mix further towards eSSDs in the second half of the year."
That makes YMTC's next step more important than its ranking. It was third in shipments, but only fifth in revenue.
The Korea Herald quoted Baek Seung-hye, a Hana Securities analyst specializing in Chinese tech and semiconductors, as saying that the gap reflects where the chips are sold as much as how advanced they are.
"With enterprise SSD prices so high right now, revenue can differ greatly depending on where the same NAND bits are used," she said.
More NAND, but where does it go?
About 63 percent of YMTC's planned IPO proceeds are earmarked for upgrading mass-production lines, with the remaining 37 percent going to research and development, including next-generation NAND and enterprise storage.
For Korean suppliers, the risk does not run only through enterprise SSDs. More capacity itself could become a problem once today's shortage eases in the future.
The key question today is where that additional output eventually goes.
This YMTC Xtacking 3D NAND package shows the memory chip itself, which can be sold directly or used as the core storage component inside a solid-state drive. (YMTC)
YMTC can sell bare NAND chips to device-makers or turn them into finished SSDs by adding controllers, firmware and other components. Normally, enterprise drives are the more valuable product. But today's shortage has made the memory chips themselves unusually profitable.
YMTC's first-quarter filing showed a gross margin of 84.23 percent for storage chips, compared with 70.29 percent for SSDs. Its factories were running at about 98 percent utilization as NAND prices surged.
The Korea Herald quoted Baek as saying the shortage has become so severe that "selling the die can actually produce a higher margin than selling an SSD."
The Korea Herald quoted Cho Eun-kyo, head of the China Industry Analysis Team at the Korea Institute for Industrial Economics and Trade, as saying, "YMTC's significance should not be judged only by NAND market share. For China, its role in making storage self-sufficient enough to run AI (artificial intelligence) chips and data centers without relying on foreign supply chains is more important."
Baek added the enterprise push could be less about today's margin than "protecting customers and pricing in the next NAND downturn," because customers that approve a server product tend to stay longer.
Korea's moat sits above the memory chip
That approval process remains one of Korea's strongest defenses.
Samsung Electronics' PM1763 is a PCIe 6.0 enterprise SSD that entered mass production in July for next-generation AI and high-performance computing servers. (Samsung Electronics)
Samsung already designs NAND, controllers and enterprise SSDs in-house. SK hynix spent heavily to acquire Intel's NAND business in 2021, now Solidigm, gaining its enterprise controllers, firmware and data-center customer base.
The Korea Herald quoted Baek as saying, "YMTC is now trying to move into that same value chain."
For all its scale in NAND, YMTC is still a relatively small SSD vendor. Finished drives accounted for only about 10.4 percent of its first-quarter NAND revenue, and enterprise SSDs were only part of that.
YMTC's PE501 is a current-generation data-center solid-state drive built around PCIe 5.0, the interface widely used in today's high-performance servers. (YMTC)
YMTC already sells PCIe 5.0 enterprise SSDs, but launching a product is only the first step. Server customers test new drives for reliability, compatibility and performance before placing large orders. Controllers and firmware also determine how reliably the NAND performs under demanding workloads.
The complication for Korea is that YMTC may not need Amazon Web Services or Microsoft to start building that record.
The Korea Herald quoted Cho as saying, "China has telecom operators, state-run data centers, internet companies and the Xinchuang market. These can serve as early customers and shorten the time needed to accumulate field data."
Xinchuang is a national strategic initiative focused on innovation in applied information technology.
Chinese controller and storage companies can also build drives around YMTC NAND, allowing local memory into Chinese servers without every finished SSD carrying the YMTC name.
"For Samsung and SK hynix, adoption inside Chinese AI infrastructure may therefore matter before any marquee Western hyperscaler contract appears," Cho explained.
Pressure either way.The near-term threat should not be overstated. YMTC still has to prove enterprise reliability at scale, while US restrictions limit access to some advanced technologies. But more capacity creates another risk if the market loosens.
"If YMTC succeeds in enterprise SSDs, it attacks the high-value enterprise market. If it fails, the added capacity can stay in consumer or client NAND and pressure commodity prices," The Korea Herald quoted Baek as saying. (ANI)