Samsung, SK Hynix get indefinite waivers to ship U.S. chip equipment to their China factories

Samsung and SK Hynix, the South Korean chip giants, have received a significant boost as they are now allowed to ship U.S. semiconductor manufacturing equipment to their China factories without the need for separate U.S. approvals. This decision, announced by the U.S. government, comes as a relief to the companies, as they had previously obtained one-year waivers that were set to expire this month. The move ensures the uninterrupted supply of advanced tools for their China plants, which play a crucial role in their chip production.

Choi Sang-mok, Seoul’s senior presidential secretary for economic affairs, hailed the U.S. government’s decision as a resolution to a significant trade issue for South Korea’s semiconductor companies. This development brings stability to Samsung and SK Hynix, as their chip production in China heavily relies on U.S. equipment. China, being a key manufacturing hub, accounts for a substantial portion of both companies’ chip production capabilities. According to a Fitch report, China represents 40% of Samsung’s total flash memory chips (NAND) production capability, while it accounts for 40%-50% of SK Hynix’s dynamic random access memory (DRAM) chips and 20% of its NAND capacity.

Samsung Electronics and SK Hynix are globally recognized as the largest and second-largest DRAM memory chipmakers, respectively, according to data from market research firm TrendForce. This latest development solidifies their positions in the industry and ensures their continued growth and success. With the ability to import advanced tools for their China plants without restrictions, Samsung and SK Hynix can focus on innovation and meeting the increasing demand for semiconductor chips worldwide.

The U.S. government’s decision comes in the wake of sweeping rules implemented last October to limit China’s access to high-tech semiconductor chips. The concern was that China could leverage these chips to enhance its military capabilities. In response, Beijing has invested billions of dollars in its domestic semiconductor industry, making significant strides in the development of advanced chips. For instance, despite existing U.S. sanctions, Huawei recently launched a new 5G-enabled smartphone featuring a remarkably advanced 5G processor produced by domestic firm Semiconductor Manufacturing International Corporation.

As the global semiconductor industry continues to evolve, Samsung and SK Hynix are well-positioned to maintain their leadership roles. The U.S. government’s decision to allow the shipment of semiconductor manufacturing equipment to their China factories without additional approvals demonstrates the confidence placed in these companies. With their commitment to innovation and their ability to adapt to changing market dynamics, Samsung and SK Hynix are poised to drive the future of the semiconductor industry and contribute to technological advancements worldwide.

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