“The More the U.S. Restricts, the More China Invests”: CXMT Completes Prototype Validation for 4F²-Based Sixth-Generation DRAM, Accelerating Self-Sufficiency in Materials, Parts and Equipment

Chinese government support and chipmaker purchases secure markets for domestic equipment
Production-floor validation helps refine materials, components and equipment technologies
Domestic supply base strengthened from equipment procurement to maintenance

China is investing heavily in next-generation memory and semiconductor equipment and components, expanding its own supply chain to counter U.S. export controls. Chinese chipmaker ChangXin Memory Technologies (CXMT) has completed validation of a next-generation DRAM prototype, while efforts are also underway to localize the lithography equipment and key optical components needed for production. With the government funding development and chipmakers testing and adopting domestic equipment, materials, components and equipment suppliers have gained opportunities to validate performance and refine their technologies on actual production lines. China plans to add component replacement and maintenance capabilities to this foundation, replacing equipment and technical support whose supply the U.S. has restricted with offerings from domestic companies. As localization progresses, China’s dependence on foreign suppliers, which has constrained its production expansion, is expected to decline, gradually reducing the impact of sanctions.

CXMT Unveils Progress in Sixth-Generation DRAM Process Development

According to Chinese news outlet The Paper on the 4th, China’s ChangXin Memory Technologies (CXMT) has completed prototype validation of a sixth-generation DRAM process platform using a 4F² structure and is working toward supplying customer samples at year-end. The development milestone disclosed at its third-quarter earnings briefing on the 30th of last month was the completion of engineering sample validation for the sixth-generation DRAM process platform using the 4F² structure. Engineering samples are prototypes used to check performance and functionality before a formal product launch, and CXMT said key performance metrics on actual wafers had reached design targets. This was also its first disclosure that it had applied the 4F² technology previously introduced at an academic event to its own sixth-generation process. At year-end, the company plans to deliver customer samples of the first product to use the technology: DDR5 RDIMM server memory modules.

The core of 4F² development is to reduce the area occupied by a memory cell by positioning its current-carrying channel vertically. The vertical surrounding-gate (VSG) transistor developed by CXMT has a gate wrapped around the upright channel and is designed to improve current control and suppress leakage current. The “F” in 4F² refers to the minimum line width or spacing achievable through lithography, and the area of a single cell is four times its square. The aim is to fit more storage onto a wafer by reducing cell area at the same line width. At an academic event on the 10th of last month, CXMT President Cao Kanyu introduced the structure and development progress, saying the company had secured more than 300 published patent families related to 4F².

Alongside vertical transistors, CXMT is developing a manufacturing process that combines storage cells with peripheral circuitry. The key is hybrid bonding: fabricating the data-storing cell array and the peripheral logic circuitry that controls reading and writing on separate wafers, then joining them through fine metal contacts. Making the two areas separately provides greater scope to tailor lithography and impurity implantation conditions to each. The design aims to increase storage-cell density while ensuring the operating performance of peripheral circuitry. CXMT has independently researched the technology since 2019 and recently expanded its development scope to detailed processes that improve bonding stability. An international patent application published in April this year describes a structure and manufacturing method that use a diffusion barrier to prevent metal atoms from spreading along the bonding interface. The company plans to apply both vertical storage cells and hybrid bonding to its server DDR5 RDIMMs.

Table 1. Funding Support and Domestic Equipment Adoption in China’s Semiconductor Industry

Chinese Government Supports Everything from Fab Expansion to Equipment Development

Sustained funding from the government and state-owned financial institutions underpins technological development in China’s semiconductor industry. After establishing its national semiconductor investment fund, known as the Big Fund, in 2014 and 2019, China launched a third-phase fund in 2024 with registered capital of CNY 344 billion, equivalent to USD 47.5 billion at the time. China’s Ministry of Finance participated as the largest shareholder, with a China Development Bank-affiliated investment firm and major state-owned banks also contributing funding. Recipients of earlier Big Fund support included foundries SMIC and Hua Hong and NAND flash manufacturer YMTC, while the third-phase fund made semiconductor manufacturing equipment a key investment area. As U.S. export controls made advanced chips and equipment harder to procure, China responded by providing state-level capital for production facilities and equipment development.

Alongside financial support, China pursued policies to secure markets for domestic equipment. According to a Reuters report last December, Chinese authorities were found to have required companies building or expanding semiconductor fabs to source at least 50% of their equipment domestically. Companies had to demonstrate their share of domestic equipment through bidding documents during the approval process, with the standard applied flexibly to advanced processes depending on supply conditions. The measure is seen as an effort to give domestic equipment makers opportunities to enter actual production lines, validate performance and make improvements. At the time, Naura, China’s largest semiconductor equipment maker, was testing equipment on SMIC’s 7-nanometer production line after supplying etching equipment for 14-nanometer processes. Since then, equipment from Naura and AMEC has been deployed at Chinese production facilities, expanding the use of domestic products in etching as well.

Huawei Expands Investment in Domestic Lithography Equipment

Investment in equipment localization has led to lithography equipment development and production-line validation. According to the Financial Times (FT), Huawei has funded Chinese lithography equipment makers and arranged business with chipmakers such as SMIC. The approach helps them secure both the funding needed for equipment development and production sites where performance can be tested. Deep ultraviolet (DUV) lithography equipment co-developed by Shanghai-based equipment maker Yuliangsheng is also reportedly being tested on SMIC and Huawei production lines. Its operating performance is currently being assessed on relatively less complex semiconductors, with improvements underway aimed at its eventual use in advanced artificial intelligence (AI) chip production.

Investment in lithography equipment localization has also extended to key optical components that remain heavily dependent on foreign suppliers. With some Yuliangsheng prototypes using foreign optical components, the aim is to establish a domestic supply base for lenses that precisely project circuit patterns onto wafers. This is also why Huawei’s investment arm Habo and the Huawei-backed Shenzhen Yuanzhi Xinghuo Fund invested in ultraprecision optical component maker Fujian Zhiqi Photonics. Fujian Zhiqi Photonics was spun off from Chinese optical materials company Castech in 2022, and its parent company Castech has produced optical crystals for lasers and supplied them to ASML and Huawei. The apparent aim is to use the optical materials technology and experience accumulated through supplying existing customers to develop key components for Chinese-made lithography equipment.

Accelerating the Acquisition of Equipment Repair and Replacement Technologies

Along with lenses, efforts are underway to localize the light sources that generate the light used in lithography. Japan’s Gigaphoton and ASML subsidiary Cymer dominate the DUV light-source market, making domestic light sources essential to establishing a supply chain for Chinese-made lithography equipment. To this end, Habo also invested in Chinese light-source developer Beijing RSLaser. Beijing RSLaser has previously supplied light sources for existing DUV equipment made by Chinese lithography equipment manufacturer Shanghai Micro Electronics Equipment (SMEE). Alongside its support for lithography equipment developers, Huawei is allocating funding to lens and light-source makers, broadening procurement channels for key components.

China’s investment in materials, components and equipment appears to be translating into higher sales and accumulated technological expertise for equipment makers. When U.S. export controls made it difficult to maintain Lam Research equipment, Naura developed electrostatic chucks, key components that hold wafers in place, to replace aging parts. This was an initial example of a domestic company beginning to acquire the repair and replacement technologies needed even after equipment installation. Lee Ki-jung, CEO of TrinityFab and a former SK hynix vice president, also emphasized the importance of supply-chain competitiveness, saying, “China’s self-sufficiency in semiconductor materials, components and equipment is now only a matter of time.” Lee identified validation data accumulated on the production floor as a requirement for equipment makers’ growth. He explained that data demonstrating equipment performance, processing speed and cost competitiveness must accumulate before customer adoption and follow-on supply can materialize. Indeed, China’s expanding domestic production lines are serving as a foundation for materials, components and equipment suppliers to validate equipment and build a track record of improvements.

China’s Semiconductor Self-Sufficiency Puts U.S. Export Controls to the Test

China is pushing to build its own supply chain because restricted access to advanced equipment and technology has directly constrained its expansion of semiconductor production capacity. In October 2022, the U.S. Department of Commerce introduced manufacturing equipment export controls targeting Chinese production facilities for logic chips using non-planar transistors at the 16/14-nanometer node or below, DRAM at 18 nanometers or below, and NAND flash with 128 layers or more. License applications to supply equipment to advanced fabs owned by Chinese companies were subject to a presumption of denial. The rules also required licenses for U.S. persons to support semiconductor development and production at those facilities, bringing technical support provided by engineers under the controls as well. Immediately after the sanctions, U.S. equipment maker KLA decided to suspend some equipment sales and services to advanced fabs in China, with CXMT, YMTC and SMIC cited as major companies affected. Facing restrictions on everything from bringing in new equipment to maintaining the performance of existing facilities, Chinese companies shouldered a double burden in expanding capacity and improving processes.

The U.S. has since narrowed the routes through which China could circumvent sanctions by improving equipment performance or using overseas suppliers. In December 2024, it added controls on 24 types of semiconductor manufacturing equipment, including etching, deposition, lithography and metrology tools, and three types of software tools, while also placing high-bandwidth memory (HBM) under restrictions. In particular, it increased pressure on China’s process improvements by controlling even software that boosts the productivity of advanced equipment or enables older equipment to manufacture advanced chips. It expanded the Foreign Direct Product Rule (FDPR) to apply export controls to certain foreign-made manufacturing equipment linked to U.S. technology and components, and added 140 entities and companies, including equipment makers, semiconductor fabs and investment firms, to an export restriction list. The measures targeted both China’s production facilities and the equipment and software suppliers supporting them. This context also underlies assessments that, without U.S.-China tensions, CXMT and YMTC would have built greater production capacity and stronger technological capabilities, putting pressure on South Korean companies. The interpretation is that South Korean memory companies’ ability to maintain their competitive edge also reflects the effects of export controls that slowed China’s equipment expansion and process transitions.

Because U.S. sanctions have targeted China’s dependence on foreign technology, supply-chain localization is a factor that weakens that pressure. Last August, Goldman Sachs estimated that China’s supply of wafers made using advanced processes at 7 nanometers or below would grow at an average annual rate of 46% from 2025 to 2035, shrinking the domestic supply shortfall relative to demand from 92% to 34%. The figures assume expansion of SMIC’s production facilities and improved yields, meaning a correspondingly larger share of Chinese demand would be met by domestic production. If the share of manufacturing equipment and maintenance parts procured domestically also rises, China will have greater scope to sustain production and expand facilities even after import restrictions. China’s investment and technological development are thus working in tandem to reduce dependence on technology and equipment controlled by the U.S. and its allies and limit production disruptions caused by sanctions.