Samsung Electronics Co. 8GB Double-Knowledge-Price (DDR) 4 memory modules.
SeongJoon Cho | Bloomberg | Getty Photographs
The U.S.-China chip war could effects South Korea’s chip giants as China accounts for a significant chunk of their creation ability — but there shouldn’t be extensive-term disruptions, according to Fitch Ratings.
Samsung Electronics and SK Hynix face threats as the U.S. seeks to block China’s access to sophisticated semiconductor chip machines, in accordance to the June 7 report.
China accounts for 40% of Samsung’s full flash memory chips (NAND) creation ability, claimed the analysts led by Matt Jamieson. It also accounts for 40%-50% of SK Hynix’s dynamic random access memory (DRAM) chips and 20% of its NAND capability.
“We do not believe there would be a main extensive-term provide disruption, as it is most likely that Korea will develop into the most important location for the two companies’ expansionary financial commitment and technological know-how updates,” the credit ratings agency said in the June 7 report.
The U.S. in October launched sweeping guidelines to minimize off China’s access to attain or manufacture substantial-tech semiconductor chips. They came as fears grew over China’s capability to use such large-tech chips to advance its army abilities. The Netherlands and Japan are reportedly poised to observe match.
Samsung Electronics and SK Hynix are the two most significant makers of memory chips globally, followed by U.S.-based Micron in third position. Memory chips are storage devices used in desktops, smartphones and tablets.
The companies’ fabrication crops in China make state-of-the-art chips as very well as more mature chips, which are exempted from the U.S. restrictions. The memory chips are made for Chinese intake as nicely as exports.
On the other hand, the two chip giants received 1-year waivers from the U.S. to keep on importing superior applications for their China crops until October, according to the Korea Situations.
“Should the U.S. not extend the waiver, we count on the businesses to proceed creating memory chips at their Chinese vegetation working with already put in technological know-how,” said Fitch Ratings.
Benefit from Micron ban
In what is observed as a retaliatory move, China banned the sale of products and solutions from Micron for use in significant information and facts infrastructure in May perhaps.
Fitch Ratings claimed Samsung and SK Hynix “may well gain from increased chip price ranges in China as a outcome. However, the effects is probably to be little and could be offset if Micron redirects the sale of its memory chips outdoors of China, as this would most likely reduced world-wide chip selling prices.”
The White House reportedly urged South Korea not permit its chipmakers fill Micron’s void in China. Around 10% of Micron’s revenue come from China, according to Micron’s fiscal 2022 report.
The Fitch report claimed the two South Korean chipmakers will at the very least partly fill Micron’s gap. “It will be complicated to watch what capacity dropped by Micron is truly filled by the Korean companies, given the commodity-like mother nature of memory chips.”
“The logistics of this system could acquire time, but could offset any constructive impression Samsung Electronics and SK Hynix may possibly get hold of from the ban on Micron within China in gentle of the world’s memory chip oversupply,” the analysts explained.
Nevertheless, risks could even further enhance if the U.S. or China carry out extra extraordinary rulings and bans, as it will influence the price tag and availability of semiconductor supply-chain components, they extra.
