Caixin
Dec 07, 2019 03:57 AM
BUSINESS & TECH

Chipmaker Secures Patent Deals as China Seeks to Break Foreign Tech Dependence

The deals will be a boost to the company as it aims to begin chip production.  Photo: VCG
The deals will be a boost to the company as it aims to begin chip production. Photo: VCG

A 3-year-old state-backed memory-chip maker has signed two deals with a Canadian patent-licensing company that will give China access to the technology it needs to produce the widely used chips domestically.

The deals mark the latest attempt by a Chinese company to leapfrog to a higher level of technological capability. The agreements come as China pushes for self-sufficiency in high-tech industries after its trade spat with the U.S. laid bare its dependence on foreign suppliers for crucial types of microchips.

ChangXin Memory Technologies Inc. (CXMT) has signed two agreements with a subsidiary of Quarterhill Inc. related to DRAM technologies developed by chip designer Infineon Technologies AG, according to a joint statement released Thursday. One deal is a licensing agreement that will give ChangXin Memory access to some of the technologies, while the second will give it outright ownership of other intellectual property. The statement did not disclose details such as the exact number of patents or the financial terms of the deals.

Founded in 2016 in Hefei, capital of East China’s Anhui province, CXMT makes DRAM, one of two major types of memory chips, which are commonly used in personal computers and servers. The company was established as part of Beijing’s effort to develop its own semiconductor industry, an area that has received billions of dollars of government funds over the past decade.

Results of this state-led effort, however, remain patchy. China still mostly relies on overseas companies for its supply of the two major types of memory chips. Last year, its imports of the chips were worth $123 billion.

For DRAM, CXMT aims to break into a market dominated by three global companies, Micron Technology Inc. in the U.S. and South Korea’s Samsung Electronics Co. Ltd. and SK Hynix Inc. The three companies, which control the majority of global patents in the area, had nearly 96% of the market in the first quarter of this year, according to industry data tracker TrendForce Corp.

CXMT’s patent acquisition from a Western company comes as such acquisitions by Chinese companies have been increasingly pushed back against by patent holders and regulators amid widespread worries about intellectual property theft. The latest case involved Chinese chipmaker Fujian Jinhua Integrated Circuit Co. Ltd., which was almost thrown into bankruptcy late last year after U.S. government placed it on an export blacklist that barred its access to U.S. technologies.

The patent licensing deals could help CXMT bolster its strength in the event of a “patent war” in the future, said an industry insider who spoke on the condition of anonymity.

“These two agreements represent the latest effort made by CXMT to further expand its intellectual property portfolio, build upon its technology strategy, and secure rights to operate its DRAM business,” CEO and Chairman Yiming Zhu said in the joint statement.

The deals will also be a boost to the company as it aims to begin chip production. CXMT’s current chip factory in Hefei had a total investment of about 150 billion yuan ($21 billion) and was designed to be able to produce 120,000 chips a month in its first phase of production.

Contact reporter Mo Yelin (yelinmo@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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