Korea’s Samsung, SK Hynix caught in crossfire of US-China chip war

Posted on : 2023-05-23 16:48 KST Modified on : 2023-05-23 16:48 KST
Though the two Korean firms could potentially stand to gain from China’s sanctions on Micron, they have yet to make any official statements on the developments

China has announced a ban on the use of products made by Micron Technology, the largest memory semiconductor company in the United States, in certain sectors of the Chinese economy, putting South Korean semiconductor companies to the test once again. In the short term, these Korean firms could potentially benefit from selling their products to China in place of the US chipmaker. However, this situation also presents unpredictable risks, particularly with the escalating US-China tensions revolving around the semiconductor industry.

On Monday, sources from both the South Korean government and the local semiconductor industry indicated that the Chinese measures might enable companies such as Samsung Electronics and SK Hynix to fill the void left by Micron, thereby reaping some indirect benefits.

Kim Young-gun, an analyst at Mirae Asset Securities, commented, “South Korean semiconductor firms, which have production bases in China, could, partly by choice and partly by necessity, serve as a decent supply channel for a while.”

However, these benefits are expected to be limited. Chinese semiconductor companies like Yangtze Memory Technologies and Changxin Memory Technologies might be able to rapidly fill the gap left by Micron.

“While local Chinese companies have lower yields and higher production costs compared to Korean manufacturers, if the Chinese government takes this opportunity to accelerate its push toward semiconductor self-sufficiency, Chinese semiconductor companies might be able to bridge the supply gap left by Micron in the near future,” noted an insider from the South Korean semiconductor industry.

Consequently, the South Korean semiconductor industry seems more concerned about the escalating US-China conflict and its potential risks rather than any indirect benefits.

A high-ranking executive from a South Korean semiconductor company, who asked to remain anonymous, commented, “As South Korea-US relations become tighter, China may expand its retaliatory measures to target South Korean companies.” The executive added, “There is too much uncertainty to discuss any potential benefits from the import ban on Micron.”

The industry also fears that the US might urge the South Korean government and companies to join in on imposing more robust sanctions against China in response to its recent actions. However, Kim Yang-paeng, a senior researcher at the Korea Institute for Industrial Economics and Trade, believes that China is unlikely to take such a drastic step, as “it could create problems for Chinese companies using semiconductors.”

In a meeting with reporters on Monday, Jang Young-jin, the first vice minister of Trade, Industry and Energy, expressed confidence that “South Korean companies would not be primarily impacted by [China’s] ban on Micron.” So far, Samsung Electronics and SK Hynix have not released any official statements regarding the measures by China.

By Kim Hoe-seung, senior staff writer

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