‘Boys fight each other’, Samsung benefits: Korea takes advantage of the gap in the semiconductor chip industry when the US and China retaliate against each other

The Financial Times (FT) reported that South Korea will not prevent its major corporations such as Samsung or SK Hynix from filling the gap in the semiconductor chip industry when the US and China have moves to retaliate against each other.

Recently, the Beijing government has issued bans on US chip maker Micron in response to previous moves by Washington against Chinese companies such as Huawei or Tiktok.

The fact that the Seoul government benefits from the conflict between the two giants in the chip industry has made the White House unhappy.

Last month, the US quietly asked South Korea to control its chipmakers not to increase sales in China if Micron products were banned there. The US reason is to ensure that China will suffer the consequences of retaliation for previous technology embargoes from the Washington administration.

However, the Korean side was not very enthusiastic about this offer.

“Regarding the American side’s offers about what we can or can’t do, in reality, it all depends on the corporations. Both Samsung and SK Hynix have global operations and will consider doing business in the markets themselves,” said South Korea’s Vice Minister of Commerce Jang Young Jin.

Boy stork fighting

In 2022, the US issued a series of strict technology embargoes against China, requiring its corporations not to be allowed to sell or transfer technical products to this market without a license. .

A series of Chinese enterprises such as Huawei and many other leading technology companies are the main subjects of the above bans, and are also the victims that suffer the most.

In response, the Beijing government has imposed bans on US chip maker Micron, limiting the business of its products in the domestic market.

Specifically, the Cybersecurity Administration of China (CAC) has banned businesses from buying Micron chips on the grounds that they pose a threat to national security.

Micron’s chief financial officer, Mark Murphy, said the ban could cost the group less than 10% of its revenue.

“The impact of this ban is not clear because it depends on the type of customer, product as well as the definition of the ban. We still do not know how the meaning of ‘threat to national security’ relates to the company’s products and have not received any complaints from any customers about unsafe use of the product. ours,” said CFO Murphy.

In the fiscal year to September 2022, Micron had sales of $30.8 billion. However, the oversupply of memory chips may affect this year’s business results, in addition to the ban of the Beijing government.

According to Micron executives, about a quarter of the group’s sales come from the Chinese market.

Samsung benefits

Currently, Micron executives still expect China’s ban to only target semiconductor chips related to data centers or networks, and ignore the chip segment for smartphones. The reason is that competitors such as Samsung or Sk Hynix will benefit greatly when taking advantage of Micron’s market share if it is banned in this segment.

What’s even more ironic is that both Samsung and SK Hynix are also increasing their business in the US market, which is welcoming technology companies to open factories with billions of dollars in support from the internal budget. technology race with China.

It is very clear that Korea and some other players in the semiconductor chip industry are benefiting greatly from both the US and Chinese markets when these two giants clash. Currently, many investors are placing great expectations on Samsung and SK Hynix for making good use of this once-in-a-lifetime opportunity to expand market share.

“Even if we increase our supply to Chinese customers, the US cannot control and confirm that we are eating away at Micron’s market share,” a semiconductor industry executive in Seoul told the newspaper. FT.

“You can swap Micron’s memory chips for Samsung and Sk Hynix products in almost any area,” said SemiAnalysis chief analyst Dylan Patel.

Meanwhile, some Chinese suppliers told the FT that they are increasing their share of Micron’s market share in the domestic market to take advantage of this opportunity. However, it is still difficult to move troops abroad to expand their advantages.

On the other hand, some analysts believe that in the long term, the effects of the ban will not last for Micron when it can adjust its resources to other markets.

*Source: FT