U.S.-China chip war might injure Samsung, SK Hynix however not for long: Fitch

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The U.S.-China chip war might affect South Korea’s chip giants as China represent a big portion of their production capability– however there should not be long-lasting disturbances, according to Fitch Ratings.

Samsung Electronics and SK Hynix deal with dangers as the U.S. looks for to obstruct China’s access to sophisticated semiconductor chip devices, according to the June 7 report.

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China represent 40% of Samsung’s overall flash memory chips (NAND) production ability, stated the experts led by MattJamieson It likewise represents 40%-50% of SK Hynix’s vibrant random gain access to memory (DRAM) chips and 20% of its NAND capability.

“We do not think there would be a major long-term supply disruption, as it is likely that Korea will become the main location for the two companies’ expansionary investment and technology upgrades,” the credit scores firm stated in the June 7 report.

The U.S. in October presented sweeping guidelines to cut off China’s access to get or make modern semiconductor chips. They came as issues grew over China’s capability to utilize such modern chips to advance its military abilities. The Netherlands and Japan are supposedly poised to do the same.

Samsung Electronics and SK Hynix are the 2 biggest makers of memory chips internationally, followed by U.S.-based Micron in 3rd location. Memory chips are storage gadgets utilized in computer systems, smart devices and tablets.

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The business’ fabrication plants in China make sophisticated chips along with older chips, which are excused from the U.S. limitations. The memory chips are produced for Chinese usage along with exports.

However, the 2 chip giants gotten 1 year waivers from the U.S. to continue importing sophisticated tools for their China plants till October, according to the Korea Times.

“Should the U.S. not extend the waiver, we expect the companies to continue producing memory chips at their Chinese plants using already installed technology,” stated Fitch Ratings.

Benefit from Micron restriction

In what is viewed as a vindictive relocation, China prohibited the sale of items from Micron for usage in crucial details facilities in May.

Fitch Ratings stated Samsung and SK Hynix “may benefit from higher chip prices within China as a result. However, the impact is likely to be small and could be offset if Micron redirects the sale of its memory chips outside of China, as this would probably lower global chip prices.”

The White House supposedly prompted South Korea not to let its chipmakers fill Micron’s space inChina Around 10% of Micron’s earnings originated from China, according to Micron’s financial 2022 report.

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The Fitch report stated the 2 South Korean chipmakers will a minimum of partly fill Micron’s space. “It will be difficult to monitor what capacity lost by Micron is actually filled by the Korean companies, given the commodity-like nature of memory chips.”

“The logistics of this strategy could take time, but could offset any positive impact Samsung Electronics and SK Hynix may obtain from the ban on Micron within China in light of the world’s memory chip oversupply,” the experts stated.

However, dangers might even more increase if the U.S. or China carry out more severe judgments and restrictions, as it will impact the expense and schedule of semiconductor supply-chain elements, they included.