The war between the US and China has come back to haunt Samsung. Samsung will have to restrict chip production in China.
The ongoing tensions between the US and China are likely to hurt South Korea’s semiconductor industry. US restrictions on chip production in China have become a source of concern for companies such as Samsung Electronics and SK Hynix.
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US wants to restrict chip production in China
South Korea is the world leader in memory chip production with a market capitalization of $70 billion. A significant part of this value is provided by Samsung and SK Hynix. Both companies have invested billions of dollars in China, making it an important market for semiconductor manufacturing.
The US is threatening to limit chip production in China. It says Korean manufacturers must pull out of China or it will not be able to buy products from US companies. China and Hong Kong account for about 60 percent of South Korea’s semiconductor exports. That’s why companies like Samsung and SK Hynix are in trouble.
This move will affect the operations of Samsung and SK Hynix, which have significant investments in China. For example, Samsung Electronics has two main manufacturing plants in China, NAND and DRAM. Its factory in China accounts for 42 percent of total NAND production.
South Korea’s industry minister said there have been no discussions between South Korea and the US to date on imposing limits on technology and production levels. However, both countries said they would not allow sanctions to affect Korean companies’ investments in China.
Last year, both Samsung Electronics and SK Hynix received a one-year reprieve from US export restrictions. The South Korean government plans to start talks with the US to extend this reprieve.