South Korean Chip Giants See Shares Dip as US Tightens China Export Controls
SEOUL, SOUTH KOREA – Shares in South Korean semiconductor leaders Samsung adn SK Hynix fell Monday following a U.S. decision to revoke export authorizations needed for their advanced chipmaking operations in China. The move, reversing a more lenient approach under the Biden management, threatens to complicate production at existing facilities and perhaps benefit competitors.
The U.S. Commerce Department’s action impacts the companies’ ability to obtain crucial U.S.machinery and equipment needed to manufacture advanced chips in China, despite both samsung and SK Hynix having already invested heavily in production facilities there. While the immediate impact is expected to be limited as both companies have prioritized domestic production, the restrictions raise concerns about long-term operational stability and could accelerate a shift towards alternative equipment suppliers.
According to a trade ministry official,the U.S. decision is aligned with the Trump administration’s policy of reexamining export controls. The move comes amid ongoing trade tensions and follows recent discussions between U.S. Commerce Secretary Gina Raimondo and South Korea’s new president, Lee Jae Myung, where a joint statement wasn’t reached due to unresolved issues surrounding South Korea’s U.S. investment plans tied to tariff cuts.
Beyond Samsung and SK Hynix, shares in south Korean chip assembly and product suppliers also declined.Hanmi Semiconductor, a major SK hynix customer, tumbled 6.3%, while Hana Micron fell 2.1%. U.S. equipment makers KLA, lam research, and Applied Materials are also anticipated to see reduced sales to China as a result of the licensing change.
Analysts suggest Samsung and SK Hynix may explore expanded partnerships with Chinese equipment manufacturers to mitigate potential disruptions. “samsung and SK Hynix have planned their new production lines and processes primarily in South Korea, while maintaining the status quo in China,” noted Ryu Young-ho, a senior analyst at NH Investment & Securities. “But,Washington’s action could ultimately benefit rivals like Micron,which relies less on China for its production sites.”
The situation is further complex by former President Trump’s threat of a 100% tariff on all semiconductor imports, though Samsung and SK Hynix could be exempt due to planned investments and factory construction within the U.S. However, such tariffs would broadly disrupt the global semiconductor supply chain.