New Limits on Chip Technology Exports to China
The United States is increasingly curbing the growth of the Chinese semiconductor sector and this is posing an increasing burden on Samsung Electronics and SK Hynix, which are manufacturing products in China in close business relations with it.
According to the New York Times, the U.S. Department of Commerce is about to announce restrictions on semiconductor technology and equipment exports to China and the restrictions are likely to be based on the Foreign Direct Product Rule (FDPR).
The FDPR is to prevent a product based on U.S. software, technology or equipment from entering a certain country regardless of the location of production. The United States applied the rule to Huawei in 2020, and then its smartphone shipments plummeted from one of the highest in the world.
The new restrictions may affect both Samsung Electronics and SK Hynix. South Korea’s memory chip exports totaled US$69 billion last year, including 48 percent to China. Approximately 40 percent of Samsung Electronics’ NAND flash output is from Xi’an and about half of the DRAM chip output of SK Hynix is from Wuxi.