Samsung, SK hynix on high alert over more potential U.S. restrictions on China

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Samsung, SK hynix on high alert over more potential U.S. restrictions on China

Published: 23 Jun. 2025, 18:36

Audio report: written by reporters, read by AI

Samsung Electronics' NAND flash memory chip production facility in Xi'an, China [SAMSUNG ELECTRONICS]

Korean chipmakers including Samsung Electronics and SK hynix are on high alert as the United States is reportedly considering new restrictions on supplying U.S.-made semiconductor equipment to factories in China.

Such restrictions could disrupt operations at Korean firms’ Chinese manufacturing bases, where hundreds of billions of won in equipment is moved around annually.

According to a corporate governance report Samsung released last month, the company transferred equipment worth a total of 47 billion won ($34 million) to and from its semiconductor plants in China last year. This includes 28.9 billion won for its packaging plant in Suzhou and 18.1 billion won for its NAND flash production facility in Xi’an.

SK hynix, which also produces DRAM chips in China, recorded even greater volumes. The company transferred equipment worth 115.4 billion won last year to its DRAM fab in Wuxi, its packaging plant in Chongqing and its NAND flash facility in Dalian that it acquired from Intel. In March alone, 44.8 billion won worth in equipment was sent from Korea to the Wuxi fab.

Both companies cited "production efficiency" as the reason for moving the equipment. According to a source in the semiconductor industry, the strategy involves reallocating equipment between Korea and China to maximize output at each site — bringing outdated gear back to Korea and deploying idle units to China.

Samsung Electronics' chip factory in Xi'an, China [SAMSUNG ELECTRONICS]

A key concern is that a significant portion of the equipment transferred to China is U.S.-made. According to market tracker Gartner, the top five global semiconductor equipment companies account for over 70 percent of the total market.

Since 2019, China has been banned from importing extreme ultraviolet lithography machines from Dutch firm ASML, the industry leader. As a result, most high-end gear in use is sourced from U.S. companies like Lam Research, Applied Materials and KLA, which round out the top five.

If U.S. authorities impose new export bans on these companies, Korean firms’ strategy of flexibly moving equipment between sites could be upended. Korea has concentrated advanced manufacturing at home while handling parts of the process in China for efficiency — an optimization model that could collapse under tightened U.S. controls.

“Until now, we’ve operated under the ‘Validated End-User’ designation, which allowed blanket authorizations for exports,” a semiconductor industry insider said. “If that status is revoked, we’d have to seek U.S. approval for each shipment to China, creating serious delays and inefficiencies.”

Samsung Electronics Chairman Lee Jae-yong visits a Samsung Electro-Mechanics production plant in Tianjin, China, on March 24. [SAMSUNG ELECTRONICS]

Amid these developments, some critics argue that U.S. sanctions aimed at China may end up hurting allied firms like those in Korea while inadvertently accelerating China’s progress in memory technology.

Market research firm Counterpoint Research recently predicted that ChangXin Memory Technologies (CXMT), China’s leading DRAM maker, will see production surge by over 50 percent this year thanks to strong government backing. CXMT’s share of the global DRAM shipment market is projected to rise from 6 percent in the first quarter to 8 percent by the end of the year.

CXMT is also aggressively shifting away from legacy products like DDR4 and LPDDR4 toward more advanced DDR5 and LPDDR5 chips — a move seen as particularly alarming by industry observers.

In an editorial on Sunday, the Global Times, a Chinese state-run newspaper, argued that the U.S. actions regarding the semiconductor supply chain will only accelerate innovation among Chinese firms and negatively affect businesses in the United States and its allied countries.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK HAE-LEE [[email protected]]