Two follow-on fabs are contingent on whether the rest of China's domestic toolchain can hold 3D NAND yields at production scale.
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China’s Yangtze Memory Technologies is expected to start operations at its Phase 3 Wuhan fab late this year as the first leading-edge memory plant built to comply with Beijing's unwritten requirement that new Chinese fabs source at least half their equipment from domestic suppliers.
Three sources familiar with the plans told Reuters that more than 50% of Phase 3's tooling has been sourced inside China, that the company aims to add two more fabs of equivalent scale on top of the Phase 3 plant, and that the latter two are not yet committed to specific dates or locations. Phase 3 alone will reach 50,000 wafers per month by 2027 and 100,000 wafers per month at full capacity, doubling YMTC's current 200,000 wafers per month of combined capacity at its first two Wuhan fabs.
It was reported in late December that Chinese authorities have begun rejecting state approval for new fab construction unless applicants can prove through procurement tenders that at least half their equipment will be Chinese-made. While this rule isn’t published in any formal regulation, officials have told applicants that 50% is a baseline, not a target, with the long-term objective being exclusively domestic wafer fab rules.
It’s obvious why YMTC will be the first to launch a fab with a majority of Chinese tooling: 3D NAND. This scales vertically rather than horizontally, which shifts the manufacturing bottleneck away from lithography (the area where China's domestic toolchain is weakest) and toward high-aspect-ratio etch, deposition, and wafer bonding (where it’s strongest).
Each new generation of 3D NAND adds layers rather than shrinking features so that the same lithography node can support 128, 232, or 300+ layer stacks, provided the etch tools can cleanly cut channel holes through 7-to-10-micron dielectric stacks.
In China, it’s Advanced Micro-Fabrication Equipment (AMEC) that provides these tools. Its Primo HD-RIE dielectric etch platform, launched in 2015, was designed for high-aspect-ratio contact applications and was qualified for 6nm flash production a decade ago . AMEC has been working on 3D NAND etch ever since.
Meanwhile, Naura Technology Group, China's largest chip equipment maker by revenue, is supplying etching tools for chips with more than 300 layers, and is testing its etch tools on SMIC's 7nm logic line after deploying them at 14nm. Naura filed 779 patents in 2025, more than double what it filed in 2020, while AMEC filed 259.
All that aside, YMTC still depends on imported tools for lithography — that’s not ideal, given that U.S. lawmakers are now looking at extending the ban on EUV lithography tools to the older DUV machines that YMTC relies on heavily. In terms of Chinese alternatives, Shanghai Micro Electronics Equipment's SSA800-10W is nominally 28nm-capable, but it’s barely deployed in any production fab, and the Yuliangsheng immersion DUV scanner that SMIC began testing in late 2025 is years from supporting volume manufacturing.
For Phase 3 to clear 50% domestic tooling without leading-edge domestic litho, YMTC has to be substituting deeply elsewhere: in etch, deposition, CMP, photoresist removal, cleaning, and metrology. Analysts estimate that Chinese suppliers have reached roughly 50% self-sufficiency in cleaning and photoresist-removal tools alone.
Samsung's Taylor, Texas fab could herald a breakthrough for the chipmaker, company plans 2026 risk production
Micron starts building new 3D NAND fab in Singapore – Fab 10B promises to more than double the company's local flash production capacity
China to increase leading-edge chip output by 5x in two years
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/ymtcs-third-wuhan-fab-clears-beijings-50-percent-domestic-tooling-threshold-as-two-more-are-planned#main
- https://www.tomshardware.com
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