Exclusive: Samsung, SK Hynix to be spared brunt of China chip crackdown by U.S.

WASHINGTON, Oct 6 (Reuters) – The Biden administration plans to spare SK Hynix (005930.KS) and Samsung (005930.KS) from the brunt of recent restrictions on reminiscence chipmakers in China aimed toward thwarting Beijing’s technological ambitions and blocking its navy advances, sources mentioned.

The Commerce Division, which plans to launch new curbs on exports of know-how to China this week, will possible deny requests by U.S. suppliers to ship gear to Chinese language corporations like Yangtze Reminiscence Applied sciences Co Ltd (YMTC) and ChangXin Reminiscence Applied sciences, Inc (CXMT) if they’re making superior DRAM or flash reminiscence chips, the sources mentioned.

Nevertheless, license requests to promote gear to overseas firms making superior reminiscence chips in China shall be reviewed on a case by case foundation, sources mentioned, probably permitting for them to obtain the gear.

“The purpose is to not damage non-indigenous firms,” one of many folks briefed on the matter mentioned.

The White Home and Commerce Division declined to remark. SK Hynix Inc, Samsung Electronics Co Ltd, YMTC, and CXMT didn’t reply to requests for remark.

The Chinese language Embassy in Washington on Thursday described the anticipated guidelines as “sci-tech hegemony.” It accused the USA of utilizing its “technological prowess … to hobble and suppress the event of rising markets and growing nations.”

The transfer might assuage the worst fears of South Korean reminiscence chipmakers that the USA would possibly hobble their China-based manufacturing enterprise in its effort to thwart China’s rise, cripple YMTC and shield susceptible U.S. reminiscence chipmakers.

They nonetheless fear, nonetheless, that the case-by-case evaluate customary is way from an specific greenlight for U.S. gear to be shipped to their Chinese language amenities and will end in bickering with regulators over what shipments to approve.

Particulars of a few of the new laws dealing with China-based reminiscence chipmakers haven’t been beforehand reported.

The brand new curbs goal China-based producers of DRAM chips, which maintain data from functions whereas the system is in use, and NAND chips, that are used for information and file storage.

U.S. suppliers looking for to ship gear to China-based semiconductor corporations wouldn’t have to hunt a license from the Commerce Division if promoting to corporations producing DRAM chips above the 18 nanometer node, NAND Flash chips under 128 layers, or logic chips above 14 nanometers, the sources mentioned.

Nevertheless, U.S. firms promoting subtle know-how to indigenous Chinese language chipmakers producing DRAM chips at 18 nanometers or under, NAND flash chips at or above 128 layers or logic chips at or below 14 nanometers must apply for a license that may be reviewed with the powerful “presumption of denial” customary.

U.S. suppliers looking for to promote the gear to non-Chinese language origin firms working in China and producing those self same varieties of chips would additionally face a license requirement however the functions can be reviewed on a case-by-case foundation, the sources added.

If printed as anticipated, the foundations would mark the primary U.S. bid via export controls to focus on Chinese language manufacturing of reminiscence chips with out specialised navy functions, representing a extra expansive view of American nationwide safety, in accordance with export management specialists.

They’d additionally hit YMTC, a rising energy in manufacturing NAND chips based in 2016. Its growth and low-price choices characterize “a direct menace” to U.S.-based Micron Know-how Inc and Western Digital Corp, the White Home mentioned in a June 2021 report.

YMTC is already below investigation by the Commerce Division over whether or not it violated U.S. export controls by promoting chips to Chinese language telecoms firm Huawei Applied sciences Co Ltd. Its chips are being evaluated by Apple Inc for inclusion in a few of its iPhones in China, a significant concern for U.S. lawmakers and the Biden administration.

The foundations might additionally damage CXMT, a state-backed Chinese language firm that’s working to enter the DRAM market.

LAM Analysis Corp, Utilized Supplies Inc and KLA Corp, main U.S. distributors of kit to make chips, are more likely to be hit by the restrictions. LAM and Utilized Supplies didn’t reply to requests for remark. KLA declined to remark.

South Korea’s Samsung has a facility producing NAND Flash reminiscence chips in China’s Shaanxi Province. South Korean rival SK Hynix has bought Intel Corp’s NAND flash reminiscence chip manufacturing enterprise in Dalian and produces DRAM chips at one other China-based facility.

In accordance with consulting agency Yole Intelligence’s Walt Coon, 25% of SK Hynix’s and 38% of Samsung’s NAND wafer manufacturing relies in China, and about 50% of SK Hynix’s DRAM manufacturing is in China.

Reuters first reported that the USA was contemplating limiting shipments of American chipmaking gear to reminiscence chip makers in China together with YMTC, a part of a bid to halt China’s semiconductor sector advances and shield U.S. firms.

Reuters additionally reported final month that the Biden administration deliberate in October to broaden curbs on U.S shipments to China of semiconductors used for synthetic intelligence and chipmaking instruments.

Reporting by Alexandra Alper and Karen Freifeld; Enhancing by Chris Sanders and Richard Chang

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