Samsung Electronics Co. 8GB Double-Information-Charge (DDR) four reminiscence modules.
SeongJoon Cho | Bloomberg | Getty Photographs
The U.S.-China chip struggle might affect South Korea’s chip giants as China accounts for a big chunk of their manufacturing capability — however there should not be long-term disruptions, in accordance with Fitch Scores.
Samsung Electronics and SK Hynix face dangers because the U.S. seeks to dam China’s entry to superior semiconductor chip tools, in accordance with the June 7 report.
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China accounts for 40% of Samsung’s whole flash reminiscence chips (NAND) manufacturing functionality, mentioned the analysts led by Matt Jamieson. It additionally accounts for 40%-50% of SK Hynix’s dynamic random entry reminiscence (DRAM) chips and 20% of its NAND capability.
“We don’t assume there could be a significant long-term provide disruption, as it’s probably that Korea will turn into the primary location for the 2 corporations’ expansionary funding and know-how upgrades,” the credit score scores company mentioned within the June 7 report.
The U.S. in October launched sweeping guidelines to chop off China’s entry to acquire or manufacture high-tech semiconductor chips. They got here as issues grew over China’s skill to make use of such high-tech chips to advance its army capabilities. The Netherlands and Japan are reportedly poised to comply with swimsuit.
Samsung Electronics and SK Hynix are the 2 largest producers of reminiscence chips globally, adopted by U.S.-based Micron in third place. Reminiscence chips are storage units used in computer systems, smartphones and tablets.
The businesses’ fabrication vegetation in China make superior chips in addition to older chips, that are exempted from the U.S. restrictions. The reminiscence chips are produced for Chinese language consumption in addition to exports.
Nonetheless, the 2 chip giants obtained one-year waivers from the U.S. to proceed importing superior instruments for his or her China vegetation till October, in accordance with the Korea Occasions.
“Ought to the U.S. not prolong the waiver, we count on the businesses to proceed producing reminiscence chips at their Chinese language vegetation utilizing already put in know-how,” mentioned Fitch Scores.
Profit from Micron ban
In what’s seen as a retaliatory transfer, China banned the sale of merchandise from Micron to be used in vital info infrastructure in Might.
Fitch Scores mentioned Samsung and SK Hynix “might profit from greater chip costs inside China because of this. Nonetheless, the affect is prone to be small and may very well be offset if Micron redirects the sale of its reminiscence chips outdoors of China, as this may in all probability decrease world chip costs.”
The White Home reportedly urged South Korea to not let its chipmakers fill Micron’s void in China. Round 10% of Micron’s income come from China, in accordance with Micron’s fiscal 2022 report.
The Fitch report mentioned the 2 South Korean chipmakers will a minimum of partially fill Micron’s hole. “Will probably be troublesome to watch what capability misplaced by Micron is definitely stuffed by the Korean corporations, given the commodity-like nature of reminiscence chips.”
“The logistics of this technique might take time, however might offset any optimistic affect Samsung Electronics and SK Hynix might get hold of from the ban on Micron inside China in mild of the world’s reminiscence chip oversupply,” the analysts mentioned.
Nonetheless, dangers might additional improve if the U.S. or China implement extra excessive rulings and bans, as it is going to have an effect on the associated fee and availability of semiconductor supply-chain elements, they added.
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