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The Financial Times reported on the 30th that Kioxia, one of the world's leading chip manufacturers, warned that the escalation of Sino-US tensions may cause the market to decline sharply, and cutting the global supply chain will be "very complicated, costly and time-consuming." Floris, vice chairman of Kioxia, the world's second-largest flash memory company, said in an interview with the Financial Times that the Japanese company is analyzing the impact of the latest U.S. export control measures.
On October 7, the United States escalated its crackdown on China's semiconductor industry, including prohibiting U.S. technical personnel (including U.S. citizens, permanent residents with green cards, or legal entities incorporated under U.S. law) from assisting China in "developing" or "producing" high-end chips without U.S. permission. The Financial Times reported that U.S. restrictions targeted a Chinese company, a "competitor" of Kioxia, which was forced by U.S. export control requirements to require U.S. employees in core technology positions to leave the company.
Floris said: "We have always seen this Chinese company as something to watch and understand, and it is likely to be a rising competitor. The company has made a leap forward in technology. In the interview, Floris also said that excluding China from the supply chain would be a costly thing for the semiconductor industry and difficult to achieve in six months or a year.
Market data shows that Kioxia is currently the world's second largest flash memory company, accounting for about 1/5 of the global flash memory market. The predecessor of Kioxia was the Toshiba Memory Group. In 1987, Toshiba invented flash memory technology. In April 2017, Toshiba Memory Group was spun off from Toshiba Corporation. Since the second quarter of this year, due to the epidemic superimposed on global inflation and other factors, the demand for flash memory products in consumer electronics products has declined significantly, and Kioxia's flash memory shipments in the second quarter fell by more than 20% month-on-month.
According to the data, Kioxia currently mainly produces flash memory chips in Japan. However, the company relies heavily on the Chinese market, and its website shows that it has several branches and offices in China.
Naruyuki Okamoto, chairman of Kioxia Electronics (China), said during the Expo in 2020 that in 1972, the company received its first order from China; In 2019, the company's sales in the Chinese market reached 10.6 billion yuan, and China has become one of the most important markets for Kioxia for decades. In the future, Kioxia will still increase investment in the Chinese market.
Chen Yan, executive director of the Japan Enterprise (China) Research Institute, told the Global Times reporter on the 30th that Kioxia is the largest semiconductor company in Japan, and it is also one of the few semiconductor companies that Japan can currently handle, and its flash memory products are mainly used in consumer electronics such as mobile phones and digital cameras, and China as the world's largest consumer electronics production and consumption country, Kioxia is extremely dependent on the Chinese market. Chen Yan said that in the current global flash memory market shrinking, Kioxia decided to reduce production by 30% from October, the largest in 10 years, which shows that the company is facing unprecedented operating pressure. Chen Yan said that in this case, Kioxia does not want to make any mistakes in the Chinese market, its largest customer, let alone lightly talk about "decoupling and breaking the chain" with China.
Chen Yan mentioned that in terms of flash memory technology, Chinese companies are catching up, which can achieve a certain degree of substitution of foreign products. Japanese companies cannot form a "stuck neck" and are extremely dependent on the Chinese market, so they have no reason and qualifications to "decouple and break the chain" with China.
