Samsung and SK Hynix will be facing further chip manufacturing restrictions

South Korean semiconductor manufacturers Samsung and SK Hynix, two of the world’s largest, are likely to face additional restrictions due to China’s product manufacturing capacity. Samsung and SK Hynix specialise in memory chip manufacturing and have manufacturing facilities in China where they collaborate with local firms such as Yangtze Memory Technologies Co Ltd. (YMTC) and Changxin Memory Technologies (CXMT). Fresh comments for new restrictions were made by a Commerce department official on Thurdsay in Washington during a think tank session.

If they become official then the new regulations will be the latest in a long line of steps taken by successive administrations to counter China’s use of advanced chipmaking technologies for military purposes. The United States has already sanctioned China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC), and chipmakers like Taiwan Semiconductor Manufacturing Company (TSMC) are barred from supplying advanced chips with feature sizes smaller than 7 nanometers to the country.

The Commerce Department added new rules last year in a new set of sweeping regulations that prohibited US citizens and persons from developing or producing chips at certain facilities in China without a licence. These also made shipping chip manufacturing equipment to facilities producing chips smaller than 16 nanometers and 14 nanometers, as well as advanced memory chips, subject to a licence – a decision that shook the industry, as companies like Samsung and SK Hynix were concerned about their existing Chinese operations.

While the United States is only one of the world’s major chip manufacturing countries, it has a slew of different companies that ship critical chip design and manufacturing products.

Samsung and SK Hynix have manufacturing facilities in China, including Wuxi, Chongqing, Xian, and Tianjin.

When the new sanctions were announced in October, both Hynix and Samsung were able to apply for a temporary waiver, allowing them to continue operating in China. The US government’s goal now, according to Commerce Undersecretary for Industry and Security Alan Estevez, is to halt the growth of chip manufacturing in China.

In response to the report, the South Korean government stated that it intends to discuss the import waiver with the US, specifically whether it can be extended. Because of its massive population, China is a lucrative market for the world’s largest technology companies, and big ticket technology names like Apple and Qualcomm have a strong presence in the region. According to Apple’s earnings report for the quarter ending in December, China was the company’s second largest market, accounting for $24 billion of its $117 billion in revenue.

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