Korea chipmaker stocks fall after new U.S. rules and on other concerns

Samsung Electronics' booth at a semiconductor exhibition held at COEX in Seoul on Oct. 5. [YONHAP]

Chip stocks in Korea fell following an announcement Friday of new U.S. Commerce Department rules on the export of certain semiconductor technologies to China, where Samsung Electronics and SK Hynix have large chip plants.

It was the first day of trade after the rules were issues. The Korean market was closed in Korea on Monday for a holiday.

Shares of Samsung Electronics fell as much as 3 percent and closed Monday down 1.60 percent to 55,300. SK hynix fell 1.10 percent to 90,200 won. The Kospi fell 1.83 percent on Monday.

“Earlier in the day, both Samsung Electronics and SK hynix declined due to semiconductor export restrictions by the U.S. against China and the slowing growth of the semiconductor business,” said Park Kwang-nam, an analyst at Mirae Asset. “The drop was minimized later in the afternoon as foreign investors bought shares.”

Semiconductor shares globally have fallen following the announcement of the new U.S. restrictions. TSMC fell 8.3 percent on in trading in Taiwan.

On Monday in the United States, Nvidia fell 3.36 percent, Micron 2.89 percent and Qualcomm 5.22 percent

These companies have also been hit hard by overcapacity and high inventories and a growing sense that demand for products that use chips will remain weak.

On Friday, the U.S. Commerce Department announced a series of measures designed to limit China's access to technology that could be used in weapons or to develop weapons.

Graphical processing units, chips used in supercomputers and equipment for making advanced memory chips and processors are the focus of the rules announced Friday. The list covers products and technologies that China could use to make advanced weapons, improve military command, control and decision making infrastructure and improve the performance of autonomous weapons.

After the announcement was made, the Korean government issued a release saying that Korean companies will not be heavily affected by the rules due to the types of products they make in China and possible waivers by the U.S. government.

Samsung Electronics has a plant in Xian, China, its only memory chip production line overseas, while SK hynix has a DRAM plant in Wuxi, China.

Do Hyun-woo, an analyst at NH Research Center, said in the long run the U.S. restrictions could benefit both the Korean chipmakers and those in Taiwan.

"The U.S. government restrictions are expected to completely seal off the production of high-tech chips by Chinese companies," the analyst said.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]