As US eyes new China chip curbs, turmoil looms for global market

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SEOUL: Export restrictions being considered by Washington to halt China's advances in semiconductor manufacturing could come at a substantial cost, experts say, potentially disrupting fragile global chip supply chains - and hurting U.S. businesses.

Reuters reported on Monday that the United States is considering limiting shipments of American chipmaking equipment to memory chip producers in China that make advanced semiconductors used in everything from smartphones to data centres.

"Samsung's China production alone accounts for more than 15% of global NAND flash production... If there's any production disruption, it will make chip prices surge," said Lee Min-hee, analyst at BNK Securities. Chipmaking equipment has to be installed and fully tested months before production is due to start. Any delay in shipping the gear to China would pose a real challenge to chipmakers as they seek to manufacture more advanced chips in China facilities.

The tech giant makes 128-layer NAND flash products in Xian, analysts said, chips that store data in devices such as smartphones and personal computers, as well as in data centres. SK Hynix completed late last year the first phase of its $9 billion purchase of Intel's NAND business, including its Dalian, China NAND manufacturing facility.The move being considered by the United States is one of several recent signs of deepening tensions between Beijing and Washington over the tech sector.

"Until now, companies tended to invest in countries like China, where costs were cheap," said Kim Yang-jae, analyst at Daol Investment & Securities.

 

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