The US government has increased its ban on exporting semiconductor manufacturing equipment to China. It now includes equipment that can produce higher quality chips than 14nm.
Washington’s decision follows the adoption of the Chip Act by Congress, the United States Congress last week. This Act prohibits investment in high-tech semiconductors as well as the expansion of Chinese factories. Last year, the Chinese company SMIC began mass production for 14nm products. Many semiconductors can now be made using the 14nm process technology. This is except for smartphones that use single-chip technology.
South Korean companies are feeling the pinch from US tightening of their measures to control China’s semiconductor industry. China heavily depends on South Korea to produce semiconductors. This means that a large portion of the sales of Korean semiconductor companies is dependent on China.
In the first quarter 2022, Samsung Electronics accounted for 26.1% of sales to China. Samsung Electronics operates a NAND flash manufacturing facility in Xi’an, while SK Hynix has a DRAM manufacturing facility in Wuxi. About 40% of Samsung Electronics’ total NAND flash memory production is attributable to the Xi’an facility. Half of SK Hynix’s total DRAM production is attributable to the Wuxi plant.
According to a source, the US currently has no restrictions on China. However, if they expand their control, it could have an adverse effect on South Korean companies’ ability to keep production lines running and develop new technologies.