Samsung, SK Hynix Likely To Face Further Manufacturing Restrictions

South Korea's Samsung and SK Hynix - two of the world's biggest semiconductor manufacturers- are likely to face further restrictions concerning China's product manufacturing capaiblies. Samsung and SK Hynix specialize in manufacturing memory chips, and have manufacturing facilities in China where they produce the products alongside local firms such as the 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.

Samsung, SK Hynix In "Dialogue" With U.S. Government For New Restrictions Says Commerece Undersecretary

If they become official, the new regulations will become the latest in a series of steps that successiveadminsitrations have taken to counter Chinese use of advanced chipmaking technologies for military purposes. The U.S. has already sanctioned China's largest chip maker, the Semiconductor Manufacturing International Corporation (SMIC) and chipmakers such as the Taiwan Semiconductor Manufacturing COmpany (TSMC) are prohibited from supplying advanced chips with feature sizes smaller than 7-nanomter to the country.

Last year, in a fresh set of sweeping regulations, the Commerce Department added new rules that prohibited U.S. citizens and persons from developing or producing chips at some facilities in China without a license. These also made shipping chip manufacturing equipment to facilities producing chips smaller than 16-nanometers and 14-nanomters and advanced memory chips subject to a license - a decision that shook the industry as firms such as Samsung and SK Hynix worried about their existing Chinese operations.

While the U.S. is only one of the world's major chip manufacturing countries, it has a host of different companies that ship products crucial to chip design and manufacturing. Samsung and SK Hynix have plants in China, such as Wuxi, Chongqing, Xian and Tianjin.

TSMC's 12-inch wafer fab in Nanjing, China. Image: Kris Provoost/World Buildings Directory

When the new sanctions were announced in October, both Hynix and Samsung were able to apply for a temporary waiver which enabled to to continue their existing Chinese operations. Now, according to Commerce Undersecretary for industry and security Alan Estevez, the aim for the U.S. government is to stop the growth of chip manufacturing in China.

Mr. Estevez shared his thoughts in Washington on Thursday, and outlined that, "[w]hat will likely be is a cap on the levels that they can grow to in China," adding that his department was aware of the detrimental effects of the strict rules on the industry and that it was working with them to address the issue.

He explained:

We work with them to ensure that we aren't going to harm our allies' companies. At the same time, we're going to impede the Chinese capability of building capabilities that are going to threaten us collectively.

Commenting on the report, the South Korean government shared that it is planning on discussionng the import waiver with the U.S. particularly whether it could be extended. China is a lucrative market for the world's largest technology companies due to its massive population and big ticket technology names such as Apple and Qualcomm have a strong presence in the region. Apple's earnings report for its quarter ending in December showed that China was its second largest market and brought in $24 billion of its $117 billion revenue.

Samsung and SK Hynix control more than half of the global NAND memory market, with Samsung being the dominant player with 33% of the share and SK Hynix in second place with 20% in June 2022, according to Trendforce data.

The post Samsung, SK Hynix Likely To Face Further Manufacturing Restrictions by Ramish Zafar appeared first on Wccftech.