Outburst! The United States has liberalized its regulations on Chinese chips, and Samsung and Hynix have resumed supply, and these listed companies will be deeply affected
Against the backdrop of increasingly fierce global technology competition, the United States recently made a major decision.
On the evening of October 9, the South Korean presidential office announced that the US government decided to indefinitely extend the exemption period for Samsung Electronics and SK Hynix to import US chip equipment from its factories in China. In other words, Samsung Electronics and SK Hynix can freely supply semiconductor equipment containing U.S. technology to Chinese factories without separate approval.
Or affected by this news, this morning, Korean stocks Samsung and SK Hynix both opened high. This morning, the A-share semiconductor industry chain also went higher, with Weijie Chuangxin rising by more than 9%, and Bomin Electronics, Guoxin Technology, and Wingtech Technology following suit.
It is worth noting that in order to increase restrictions on Chinese technology, the Biden administration implemented comprehensive export control measures last year, stipulating that Samsung Electronics and SK Hynix need to obtain licenses to bring American chip manufacturing equipment into China. However, the Biden administration subsequently issued one-year export control exemptions to two chipmakers.
What will be the impact of this decision if restrictions are lifted? What are the layouts of Samsung and SK Hynix in China? Which A-share companies will be affected after the two chip manufacturers resume supply?
What does this decision mean?
In fact, this news is undoubtedly good for the Korean semiconductor industry. After all, this means that tech giants Samsung Electronics and SK Hynix can further expand their production and sales in the huge market of China, and thus obtain greater economic benefits.
According to the website of the New York Times on September 27, South Korea, which relies heavily on the semiconductor industry in terms of employment and income, is caught in the middle by the trade war between China and the United States over technical issues.
It is reported that in the past 10 years, more than half of South Korea's chip exports (once close to 67%) have been received by China. SK Hynix's share of revenue (as a share of total revenue) from China peaked at nearly 47% in 2019 and shrank to 27% last year, but remains an important part of the company's business. Now with the lifting of the equipment ban, the production of Korean semiconductors in the mainland can be guaranteed, and its supply in the mainland market is guaranteed to a certain extent.
For China, opportunities and challenges coexist.
On the one hand, Samsung and SK Hynix are world-renowned electronic manufacturing companies, and they have their own unique advantages in technology, production and management. These experiences and technologies can help China's science and technology manufacturing industry to improve production efficiency and technical level, thereby improving product quality and production efficiency. At the same time, this cooperation will also help promote the opening up of China's science and technology manufacturing industry and accelerate the pace of China's science and technology manufacturing industry in line with international standards.
U.S. consent, on the other hand, is based on certain conditions. These conditions may include not only requirements for the protection of intellectual property rights, but also restrictions on production processes, technical levels, etc. This may limit the development space of China's technology manufacturing industry to a certain extent.
Samsung and SK Hannix
What are the layouts in China?
Let's start with Samsung. According to the official website, Samsung has three production centers in China, located in Xi'an, Suzhou and Tianjin. Among them, Xi'an is one of Samsung's most important production bases, mainly producing memory chips.
Since 2013, Samsung's investment in Xi'an has been expanding, involving multiple projects such as phase I, phase II and phase III. The latest statistics show that the NAND Flash produced by Samsung's Xi'an factory accounts for 40% of the company's production capacity, and the monthly production capacity of the two factories is as high as 250,000 pieces, accounting for one-tenth of the global NAND Flash production capacity.
Samsung Suzhou plant is mainly engaged in the assembly and testing of memory, memory modules and integrated circuits.
Samsung Tianjin factory is mainly engaged in LED products, Tianyan check shows that Tianjin Samsung LED company was established in 2009, the business scope includes electronic components manufacturing, electronic components wholesale, electronic components retail, semiconductor lighting device manufacturing, etc.
Next is SK Hynix. According to the latest news, SK Hynix has two production bases in China, located in Chongqing and Wuxi.
Wuxi is one of SK hynix memory chip production centers. Some analysts pointed out that the output of the Wuxi plant accounts for about half of the company's DRAM chips, and the global output is 15%.
As for Chongqing, according to past media reports, the factory mainly focuses on chip packaging. Although the specific details have not yet been announced, some analysts believe that the Chongqing plant may become one of the focuses of SK Hynix's future development.
In addition to its two main production bases in Wuxi and Chongqing, SK Hynix also has a factory in Dalian. However, it should be noted that although SK Hynix has acquired Intel's NAND flash memory and storage business in 2021, Dalian's NAND flash memory business has not yet been fully closed.
Which A-share companies are affected?
According to the data, Samsung Electronics and SK Hynix are the world's largest memory chip manufacturers and the second largest DRAM manufacturers, respectively. As of the end of June 2023, the two South Korean companies controlled nearly 70% of the global dynamic semiconductor memory (DRAM) and 50% of the flash memory chip (NAND) market, according to Trend Force Consulting.
Some analysts pointed out that with the landing of the exemption list, Samsung Electronics and SK Hynix hope to maintain a leading position in the memory market, and will also be conducive to the stability of the supply pattern of domestic semiconductors, especially memory chips and other fields, and cooperative companies related to the industry chain are expected to benefit.
According to incomplete statistics, these companies in A-shares have provided semiconductor-related services for Samsung and SK Hynix:
In addition, according to the previously disclosed 2022 supply chain list, Samsung Electronics' suppliers include 6 Chinese mainland companies, namely AAC Technologies, BYD, Goertek, Xinan Electric, Xuguang Technology, and Sunny Optics. However, these companies provide Samsung with a variety of electronic components and assembly services, which are different from semiconductor-related services.
In general, whether it is Samsung or SK Hineix, their production bases in China are mainly memory chips. Suppliers are mainly semiconductor-related services. With the adjustment of supply and demand in the industry and the strengthening of localization trends, these companies and supply chains will also usher in more opportunities. (This article was first published on Titanium Media App, author|Zhai Zhichao)
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