The US government has expanded its ban on semiconductor manufacturing equipment to China to include equipment that can produce better chips than 14nm. Previously, the ban applied to chips more advanced than 10nm.
Washington’s move follows the passage of the Chip Act by the US Congress last week, which banned investment in high-tech semiconductors and the expansion of factories in China. Chinese company SMIC started mass production of 14nm products last year. Many semiconductors can be produced using the 14nm process technology, except for modern single-chip systems for smartphones.
The tightening of US measures to contain the Chinese semiconductor industry is putting pressure on South Korean companies. China is heavily dependent on South Korea for semiconductors, which are used to manufacture finished products. It also means that a significant portion of Korean semiconductor companies’ sales are dependent on China.
Samsung Electronics recorded 26.1% of its sales in the Chinese market in the first quarter of 2022. Samsung Electronics has a NAND flash manufacturing plant in Xi’an and SK Hynix operates a DRAM manufacturing plant in Wuxi, China. The Xi’an plant accounts for about 40% of Samsung Electronics’ total NAND memory production. The Wuxi plant is the main facility, accounting for half of SK Hynix’s total DRAM production.
The source says that the current level of US restrictions on China does not have a significant impact on South Korean companies, but if the scope of US control is further expanded, it could make it difficult for them to maintain production lines and introduce new technical processes.