Korean chipmakers in China not hit by tariffs

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Korean chipmakers in China not hit by tariffs

Korean semiconductors manufactured in China are not subject to U.S. tariffs, but there is still a possibility that they will be affected as components in China’s finished products, industry sources said Thursday.

A list of Chinese products subject to tariffs announced by the U.S. Trade Representative a day earlier includes non-memory chips, according to the sources. Both Samsung Electronics and SK Hynix produce memory chips at their plants in China.

Samsung last year put out a monthly average of 450,000 NAND flash chips, of which 22.7 percent were made at its factory in Xian, China. SK Hynix produced 297,500 DRAM chips each month, 44.2 percent of them at its plant in Xuwi, China.

“There at least won’t be damages from direct tariffs this time,” a source said.

The memory chips produced at the Chinese plants of Samsung and SK Hynix, however, go into finished Chinese products that are subject to U.S. tariffs, the sources said, opening the Korean companies to indirect repercussions.

The sources also worry that the companies will suffer losses if China decides to increase its chip imports from the United States as a means of settling the ongoing trade friction.

“Chances of a major effect in the short term are slim because Samsung Electronics and SK Hynix are far ahead in their technology, and the memory chip market is basically short on supply,” Moon Byung-gi, a researcher with the Korea International Trade Association, said. “But there is no knowing how the trade war between China and the United States will unfold, so we do need to monitor the situation closely and review countermeasures.”

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