Site icon Enrich of Tech Updates Across the World

As the US sees China’s new chips curtail, turmoil is looming in the global market

  • Any US export block could affect global chip supply – analysts
  • The move would prevent Samsung and SK Hynix from upgrading factories in China
  • Samsung and SK Hynix together supply more than 50% of the world’s NAND chips
  • Curbs could change where future chip-analyzer factories are built

SEOUL, Aug 3 (Reuters) – Export restrictions being considered by Washington to halt China’s advances in semiconductor manufacturing could come at a significant cost, experts say, potentially disrupting fragile global chip supply chains – and harm American businesses.

Reuters reported on Monday that the United States is considering limiting shipments of American chipmaking equipment to memory chip makers in China that make advanced semiconductors used in everything from smartphones to data centers. read more

The restrictions would prevent chip makers such as South Korean giants Samsung Electronics ( 005930.KS ) and SK Hynix ( 000660.KS ) from shipping new technology tools to factories they operate in China, preventing them from upgrading plants that serve customers across the world.

Sign up now for FREE unlimited access to


Samsung and SK Hynix, which control more than half of the global NAND flash memory chip market, have invested heavily in China in recent decades to produce chips that are vital to customers including tech giants Apple ( AAPL.O ) , Amazon ( AMZN.O ), owner of Facebook Meta ( META.O ) and Google ( GOOGL.O ). In addition to computers and phones, the chips are used in products such as electric vehicles that require digital data storage.

“Samsung’s production in China alone accounts for more than 15% of global NAND flash production… If there is any production disruption, it will drive up chip prices,” said Lee Min-hee, an analyst at BNK Securities. .

The potential for fresh unrest – the restrictions have yet to be approved – comes as a global chip supply shortage that has disrupted businesses from cars to consumer devices for more than a year is finally showing signs of easing. Supply chain adjustments and weakening consumer demand amid a global economic slowdown combined to reverse the damage. read more

But the shortage has not yet been fully resolved. Any signs of further disruption could reignite supply uncertainty, sending prices soaring – as seen earlier this year when China imposed COVID-19 restrictions on Xian where Samsung makes chips. read more

Chip production equipment must be fully installed and tested months before production begins. Any delay in shipping the equipment to China would pose a real challenge to chipmakers as they seek to build more advanced chips in Chinese facilities.

“Many US companies, such as Apple, use Samsung and SK Hynix memory chips. Whatever strategy (the South Korean companies) ultimately choose, it will have global implications,” said BNK Securities analyst Lee.

Samsung and SK Hynix declined to comment. Apple, Amazon, Meta and Google did not respond to emails seeking comment after US business hours.


At Samsung’s memory chip operation in central China’s Xian, one of the country’s largest foreign chip projects, the company has invested a total of about $26 billion since breaking ground on the site in 2012, including chip production as well as testing and testing and packaging.

The tech giant makes 128-layer NAND flash products in Xian, analysts said, chips that store data in devices such as smartphones and personal computers, as well as in data centers.

The facility represents 43% of Samsung’s global NAND flash memory production capacity and 15% of total global production capacity, according to TrendForce late last year. read more

The US crackdown, if approved, could also complicate SK Hynix’s ambition to expand its presence in the NAND market where it ranked third from the first quarter behind Samsung and Japan’s Kioxia Holdings, which was spun off from Toshiba Corp (6502.T).

SK Hynix late last year completed the first phase of its $9 billion purchase of Intel’s ( INTC.O ) NAND business, including its NAND manufacturing facility in Dalian, China. read more


The move being considered by the United States is one of several recent signs of deepening tensions between Beijing and Washington over the technology sector.

Congress last week passed legislation to subsidize semiconductor production in the United States. It bars any company receiving federal subsidies from investing in certain chip technology in China during the subsidy period. read more

The escalating tensions could force Samsung and SK Hynix to review investment strategies in China, analysts and industry sources said.

“Until now, companies have tended to invest in countries like China where costs have been cheap,” said Kim Yang-jae, an analyst at Daol Investment & Securities.

“That will no longer be the only issue. The biggest change these potential boundaries will bring will be where the next chip factories will be built.”

They could also face potentially diminishing returns from their multibillion-dollar factories in China, which could be stuck making older, less profitable brands.

SK Hynix has been unable to upgrade its DRAM memory chip manufacturing facility in Wuxi, China with the latest extreme ultraviolet lithography (EUV) chipmaking machines made by Dutch company ASML ( ASML.AS ) as U.S. officials do not want to advanced equipment is used entry procedure into the country. read more

EUV machines are used to make more advanced and smaller chips used in high-end devices such as smartphones.

Sign up now for FREE unlimited access to


Report by Joyce Lee. Editing by Miyoung Kim and Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.

Source link

Exit mobile version