China Needs Samsung and SK Hynix's Presence in China
China is increasing its pressure on South Korea not to join the U.S.-Japan-Taiwan alliance in the semiconductor industry.
According to experts, this pressure has to do with memory chips. “China is aiming to reduce its external dependence to 30 percent by 2025 and this goal cannot be met without Samsung Electronics’ and SK Hynix’s memory chip production in China,” one of them explained.
At present, the growth of the Chinese semiconductor industry is occurring mainly in the non-memory chip segment rather than memory chip where South Korea excels. For example, Huawei subsidiary HiSilicon is a global leading chip designer and SMIC, the largest foundry in China, developed 14-nm process technology three years ago, which means it is capable of producing every type of chips with the only exception of smartphone application processors.
On the other hand, China has failed over and over in the DRAM segment. Tsinghua Unigroup entered the market in 2017 but gave up on it last year on the brink of bankruptcy attributable to excessive investment. JHICC was driven out of the industry after technology theft from Micron Technology.
Samsung Electronics, SK Hynix and Micron Technology are currently dominating the global DRAM market and their combined market share amounts to 94.3 percent. In this segment, China’s huge investment has borne no fruit and its gap with the leaders is still wide. This is why the Chinese government is putting pressure regarding the alliance.