South Korea’s SK Hynix caught in US-China semiconductor battle
US opposition to South Korean chipmaker SK Hynix’s plans to upgrade a factory in China threatens the company’s competitiveness, underscoring the challenge to an industry mired in Washington’s growing tech rivalry. and Beijing.
SK Hynix, the world’s second-largest memory chip maker, is looking to upgrade its Wuxi factory in eastern China, where it makes about 40 percent of its Dram memory chips, which will enable short-term storage for graphics, mobile and server chips.
The company plans to install extreme ultraviolet lithography (EUV) chip machines, the next-generation chip production equipment made by Dutch company ASML. Analysts said the EUV machines should be installed within the next three years so that SK Hynix can keep pace with other global chipmakers, such as Samsung Electronics and Micron Technology, in the race to increase productivity and reduce costs.
Paul Choi, founder of StratWays Group, a Seoul-based political risk advisory firm, said US efforts to access critical technologies while denying their transfer to China fueled concerns in South Korea.
A US demand in September for semiconductor companies to provide detailed information on chip supply and demand, inventory and various customer segments was particularly concerning, he said.
“The US is concerned about technology transfer to China, but many Koreans are equally concerned about transferring their technology to the US,” Choi said. “The Koreans don’t want to be heavily armed by the Chinese, but they don’t want to be heavily armed by the Americans either.”
The US has stepped up its campaign to limit technology transfer to China. The Biden administration on Wednesday issued a dozen Chinese groups involved in quantum computing and other advanced technologies blacklisted for export.
Katherine Tai, the US trade representative, told Korean radio this week that the issue is “very sensitive” and “there are legitimate concerns about the risks to national security in terms of where this technology ends up”.
Analysts said the US could block ASML’s sales of EUV machines to China because the equipment includes US technology.
US President Joe Biden has looked for ways to make it more difficult for China to acquire advanced technology, especially in the semiconductor field, in an effort to slow down Beijing’s military modernization efforts.
In addition to talks with South Korea, Washington has discussed with the Dutch government whether ASML, the world’s most advanced manufacturer of chip-making equipment, may sell its advanced EUV lithography technology to a Chinese chipmaker.
SK Hynix has tried to allay US security concerns, saying it has no immediate plan to introduce EUV machines at its Wuxi plant and is in the early stages of producing Dram chips using the next generation of equipment at its Korean factory.
Lee Seok-hee, CEO of SK Hynix, told reporters on Monday that his company would “respond sensibly to US concerns while cooperating with interested parties”.
A Korean industry official warned that competitors of SK Hynix, such as Samsung, could face similar problems if they tried to introduce other advanced equipment into their Chinese factories, even though Samsung did not require EUV machines at its chip factory in China.
While it works to curb the transfer of advanced technology to China, the Biden administration has urged foreign chipmakers to increase production in the US over concerns about disrupted supply chains.
On Wednesday, Samsung, the world’s largest memory chip maker, announced it was building a $17 billion high-end chip factory in Taylor City, Texas.