New US Restrictions Impact Samsung and SK Hynix in China
The United States has tightened regulations for chip manufacturers Samsung and SK Hynix, making it tougher for them to produce chips in China. This change involves revoking permissions that allowed these companies to acquire American semiconductor manufacturing equipment, as noted in the federal register.
The Department of Commerce previously had some exemptions from restrictions established in 2022 regarding the sale of semiconductor equipment to China. Now, companies must secure a license to purchase such equipment for operations within China. Interestingly, Intel was mentioned as one of the firms losing its approval; however, they had already sold their Chinese unit, Darian, in a deal finalized earlier this year.
This new policy is set to be implemented in 120 days.
According to the Commerce Department’s statement, while companies can still apply for licenses to maintain their existing facilities in China, they should not expect approval for expanding or upgrading their capabilities.
SK Hynix has expressed intentions to keep in close touch with both the South Korean and US governments to mitigate any business impacts. Samsung, on the other hand, has not commented on the issue.
The South Korean government, in discussions with the Ministry of Commerce, emphasized the vital role of stable Chinese semiconductor operations in maintaining global supply chain stability.
Seoul continues its dialogue with Washington, seeking ways to lessen the impact on South Korean companies. Meanwhile, a spokesman from China’s Commerce Ministry voiced opposition to the US’s new stance, stating that China would take necessary measures to protect its businesses’ rights.
This licensing alteration might lead to a drop in sales for US equipment manufacturers like KLA Corp., LAM Research, and Applied Materials. These companies have not yet responded to requests for comments.
Back in June, when the Commerce Department hinted at the possibility of revoking its approvals, White House officials indicated that the US was “laying the foundation” in case trade negotiations with China fell through. July brought hopes from allied nations for tariff contracts, but South Korean President Lee Jae Myung left a summit with President Trump without finalizing any agreement.
The US and China are currently in a fragile state regarding tariffs, with a 30% tax on Chinese imports and a 10% duty on US goods remaining in place until November. The ongoing trade conflict has covered a spectrum of issues, from rare earth materials crucial for US industries to China’s purchases of US soybeans.
The White House has not offered any comments on this latest development.
Chris Miller, author of “Chip War,” pointed out that this decision complicates matters for Korean chipmakers operating in China as they aim to produce advanced chips. It could also benefit domestic Chinese equipment manufacturers, who might fill the gap left by the restrictions, potentially aiding major US competitors in the memory chip market.
Miller also warned that unless further actions are taken against companies like YMTC or CXMT, this shift might hinder the competitiveness of Chinese firms while favoring South Korean companies.
Recent reports indicate that countless license requests from US companies wishing to export goods to China have been stalled for months, including those involving billions in semiconductor manufacturing equipment.
Foreign chipmakers like Samsung and Hynix currently hold verified end-user status, which simplifies the shipping process for acquiring items. With the revocation of this status, the ease and speed of shipments are expected to diminish significantly.
