Will threatened US export block affect global chip supply? – report

Export restrictions considered by the US government to halt China’s progress in semiconductor manufacturing could come at significant cost, experts told a news agency.

Reuters reported Monday that the US is considering limiting shipments of US chip-making equipment to memory chip manufacturers in China that make advanced semiconductors used in everything from smartphones to data centers.

Reports said the curbs would stop chipmakers like South Korea’s Samsung Electronics and SK Hynix from shipping new technology tools to factories they operate in China, preventing them from upgrading factories serving customers around the world.

Reuters noted that Samsung and SK Hynix, which control more than half of the global NAND flash memory chip market, have invested heavily in China in recent decades to produce chips that have been vital to customers including Apple, Amazon, Facebook owner Meta and Google. The chips are not only used in computers and telephones, but also in products such as EVs that require digital data storage.

“Samsung’s Chinese manufacturing alone accounts for more than 15% of global NAND flash production…If there’s a manufacturing breakdown, chip prices will rise,” Lee Min-hee, an analyst at BNK Securities, told Reuters.

The news agency noted that the potential for new turmoil — the curbs had yet to be approved — came just as a global chip shortage that had disrupted businesses from automobiles to consumer devices for over a year finally began to show signs of easing. Supply chain adjustments and weakening consumer demand amid the slowing global economy had combined to repair the damage. The shortfall has yet to be fully resolved and any signs of new disruption could revive supply uncertainty, which could trigger a price hike – as seen earlier this year when China imposed COVID-19 restrictions in Xian, where Samsung produces chips.

Reuters added that chip-making equipment would need to be installed and fully tested months before production was to begin and that any delay in shipping to China would pose a real challenge to chipmakers as they tried more advanced chips in China. to produce factories.

“Many US companies, such as Apple, use memory chips from Samsung and SK Hynix. Whatever strategy (the South Korean companies) choose, it will have global implications,” BNK Securities analyst Lee told the news agency.

The Xian facility accounts for 43% of Samsung’s global NAND flash memory production capacity and 15% of its total global output capacity, according to Reuters, citing TrendForce.

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