Science & Technology

South Korean Companies to Supply Chip Equipment to Its Factories in China

Last Monday, October 9, the administration of the President of South Korea reported that local companies Samsung Electronics and SK Hynix will receive permission to supply chip equipment to their factories located in China.

Also, the administration of the head of the specified Asian state clarified that the permit would be valid for an uncertain period. There is no guarantee that in this case the indefinite nature of the approval of equipment supplies to Chinese factories of South Korean companies is implied. It is possible that the presidential administration meant that the permit will be terminated at some point, but it is not yet known when this will happen, although in such cases all the details are discussed initially.

An important circumstance is that South Korean companies will be able to supply chip equipment without the approval of the United States.

The US should extend the period of validity of the exception, under which firms from the mentioned Asian country are given the opportunity to import American equipment to China.

Choi Sang-mok, senior Secretary of the President of South Korea for Economic Affairs, said that currently there is a significant reduction in the level of uncertainty regarding the prospects for further activities and investments of local semiconductor companies in the People’s Republic of China. According to him, firms can develop global management strategies designed for a long period without worry and fear about the future.

Choi Sang-mok also said that the United States has already notified Samsung and SK Hynix that the exception to the requirements for licenses for the import of American chip equipment to China has been extended and entered into force.

The U.S. Department of Commerce is updating the list of verified end users. As part of this action, the agency indicates which organizations can receive export technologies. This approval allows Samsung and SK Hynix to be able to continue to supply chip manufacturing tools developed by American specialists to their factories located in China. This was reported in the administration of the President of South Korea.

Companies that are on the list of verified end users can supply American equipment without obtaining an additional export permit.
Samsung and SK Hynix are the world’s largest and second-largest memory chip manufacturers. These companies have invested several billion dollars in their production facilities in China. The firms welcomed the decision of the American side.

Samsung stated that as a result of close coordination with the relevant governments, the uncertainty associated with the realization of the possibilities of operating semiconductor production lines in China has been largely eliminated.

SK Hynix welcomed the decision of the United States to extend the export control exemption. The company also stated its assumption that this decision will contribute to the stabilization of the global semiconductor supply chain.

China is an important industrial center for these firms. Samsung manufactures approximately 40% of its NAND flash chips at its factory in Xi’an. SK Hynix produces about 40% of its microcircuits DRAM in Wuxi and 20% of NAND flash chips in Dalian.

TrendForce data shows that as of the end of June, these companies together controlled almost 70% of the global DRAM market and 50% of the NAND flash memory market.

As we have reported earlier, Samsung Cuts in Memory Chip Production.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.