Samsung's plan to make memory chips more efficient in China is in jeopardy

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Samsung's plan to make memory chips more efficient in China is in jeopardy

Sources familiar with the matter told the matter that Korea's SK Hynix plans to overhaul a huge facility in China to make memory chips more efficient are in jeopardy because U.S. officials don't want advanced equipment used in the process to enter China.

The possibility of a setback could make SK Hynix, one of the world's biggest suppliers of DRAM memory chips that go into everything from smartphones to data centers, the next victim of the geopolitical battle between the United States and China.

Three people with knowledge of the matter said that SK Hynix's production plans call for the company to upgrade a mass production facility in Wuxi, China, with some of the latest extreme ultraviolet lithography EUV chipmaking machines made by Dutch firm ASML.

The United States has objected to the idea that shipping such advanced tools to China could strengthen the country's military.

A White House official didn't say anything about the matter of whether U.S. officials would allow SK Hynix to bring EUV tools to China. The Biden administration is focused on preventing China from using U.S. technology to develop state-of-the-art semiconductor manufacturing that would help China modernize its military, according to a statement by the official.

The Wuxi factory is critical to the global electronics industry because it makes about half of SK Hynix's DRAM chips, which amount to 15% of the global total. According to IDC, demand is growing at 19% in 2021, and there is a chance that any major changes will affect global memory markets.

As newer chips make up a larger share of SK Hynix's production over the next two to three years, the company will need the EUV machines to control its costs and accelerate production, a source with knowledge of the company's operations in China said.

The extent of the concerns inside SK Hynix has not been previously reported. SK Hynix could be at a disadvantage against rivals such as No if the situation is not resolved in the next several years. The 1 memory chipmaker Samsung Electronics Co Ltd and the United States Micron Technology are two major players in the DRAM market. Both Samsung and Micron are switching to ASML's EUV machines but are not using them at factory locations where the machines are subject to export restrictions.

Two people briefed on his visit said that the ASML machines have drawn a lot of concern within SK Hynix that Chief Executive Lee Seok-hee raised the issue with U.S. officials during a visit to Washington, D.C. in July.

SK Hynix hasn't commented on the matter, but it is doing its best to respond to market and customer demands without issue, and is doing its best to respond to market and customer demands.

The Trump administration successfully campaigned to stop the sale of ASML technology to China's state-backed Semiconductor Manufacturing International Corp, lobbying the Netherlands government with White House officials sharing a classified intelligence report with the country's Prime Minister.

An ASML spokesman said that the company abides by all export control laws and views them as a valid tool for governments to ensure national security. The overuse of the controls could affect the production capacity needed to stay ahead of the increasing demand for semiconductors, according to the company. The spokesperson said that widespread use of export controls could cause microchip supply chain issues, which are already a major concern of governments and policy makers around the world because of the spill-over effect on other industries, such as the automotive industry.

Analysts don't believe that U.S. officials would view SK Hynix's efforts to bring an EUV tool into China any differently than earlier efforts by Chinese firms.

They're really caught between a Chinese rock and a U.S. hard spot, said Dan Hutcheson, chief executive officer of VLSIresearch, who said that the rules would apply to any chip manufacturing operations in China, foreign or domestically controlled. Anyone who puts an EUV tool in China gives China the capacity.