The US revokes a previous exemption for memory manufacturers Samsung and SK Hynix, prohibiting them from importing American machines for use in their Chinese factories.
In the US, President Trump’s administration has revoked an exemption for South Korean chip manufacturers Samsung and SK Hynix. These companies are no longer allowed to ship American equipment to their Chinese factories. This was permitted under an exemption provided by the Biden administration, but it will expire within 120 days.
Not without the US
The move will impact global memory production. Samsung and SK Hynix have significant production capacity in China. American technology is part of the most advanced production lines for cutting-edge memory chips. If the companies can no longer use this technology, it will become impossible to build the most advanced memory chips in their Chinese factories.
The technological supply chain for chip production is very fragile and relies on materials and machines from a limited range of specialized companies. It’s not possible to simply replace the American contribution with solutions from another party.
The US wants to limit the production of advanced chips in China in an attempt to stay technologically ahead of the country. Chinese companies are the main target. However, South Korean companies like Samsung and SK Hynix have set up a large part of their production in China. To avoid unnecessarily affecting these companies, they received an exemption in 2023 that allowed them to import American technology to China for use in their own factories.
Pressure Tactic
Why the US is now ending the exemption is unclear. There is no reason to believe that the memory manufacturers are misusing the supplied technology in any way to China’s advantage. It is notable, however, that the US and South Korea are currently negotiating import duties. By removing the exemption within 120 days, the US gives itself an additional means to put pressure on the Koreans.
The decision will be felt globally. Memory production in China accounts for ten to fifteen percent of global capacity. Samsung and SK Hynix are among the largest manufacturers of memory chips in the world. When they can no longer maintain their Chinese production lines, it will reduce the available amount of RAM and NAND globally, while prices will rise.