Unique-Samsung, SK Hynix to be spared brunt of China chip crackdown by U.S. -sources By Reuters

© Reuters. FILE PHOTO: Workers stroll previous the emblem of SK Hynix at its headquarters in Seongnam, South Korea, April 25, 2016. REUTERS/Kim Hong-Ji

By Alexandra Alper and Karen Freifeld

WASHINGTON (Reuters) – The Biden administration plans to spare SK Hynix and Samsung (KS:) from the brunt of latest restrictions on reminiscence chipmakers in China geared toward thwarting Beijing’s technological ambitions and blocking its army advances, sources stated.

The Commerce Division, which plans to launch new curbs on exports of expertise to China this week, will probably deny requests by U.S. suppliers to ship tools to Chinese language companies 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 stated.

Nonetheless, license requests to promote tools to overseas corporations making superior reminiscence chips in China might be reviewed on a case by case foundation, sources stated, probably permitting for them to obtain the tools.

“The aim is to not harm non-indigenous corporations,” one of many folks briefed on the matter stated.

The White Home and Commerce Division declined to remark. SK Hynix Inc, Samsung Electronics (OTC:) 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 US 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 US 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, nevertheless, that the case-by-case evaluation commonplace is much from an express greenlight for U.S. tools to be shipped to their Chinese language amenities and will lead to bickering with regulators over what shipments to approve.

Particulars of among the new rules going through China-based reminiscence chipmakers haven’t been beforehand reported.

The brand new curbs goal China-based producers of DRAM chips, which maintain info 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 tools to China-based semiconductor companies wouldn’t have to hunt a license from the Commerce Division if promoting to companies producing DRAM chips above the 18 nanometer node, NAND Flash chips beneath 128 layers, or logic chips above 14 nanometers, the sources stated.

Nonetheless, U.S. corporations promoting refined expertise to indigenous Chinese language chipmakers producing DRAM chips at 18 nanometers or beneath, NAND flash chips at or above 128 layers or logic chips at or underneath 14 nanometers must apply for a license that may be reviewed with the robust “presumption of denial” commonplace.

U.S. suppliers looking for to promote the tools to non-Chinese language origin corporations working in China and producing those self same sorts 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 by means of export controls to focus on Chinese language manufacturing of reminiscence chips with out specialised army functions, representing a extra expansive view of American nationwide safety, in keeping with export management consultants.

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

YMTC is already underneath 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 (NASDAQ:) for inclusion in a few of its iPhones in China, a significant concern for U.S. lawmakers and the Biden administration.

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

LAM Analysis Corp, Utilized Supplies Inc (NASDAQ:) 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 (NASDAQ:)’s NAND flash reminiscence chip manufacturing enterprise in Dalian and produces DRAM chips at one other China-based facility.

Based on consulting agency Yole Intelligence’s Walt Coon, 25% of SK Hynix’s and 38% of Samsung’s NAND wafer manufacturing is predicated in China, and about 50% of SK Hynix’s DRAM manufacturing is in China.

  Reuters first reported that the US was contemplating limiting shipments of American chipmaking tools 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. corporations.

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.

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