U.S. Frees Korean Tech Titans from Licensing in China

According to Reuters, memory manufacturers Samsung and SK Hynix have secured an indefinite exemption from the United States, eliminating the need for specialized permissions to install manufacturing equipment imbued with American technology in their Chinese factories. The office of the South Korean President subsequently relayed this information, having received official notification. This development significantly alleviates the uncertainties surrounding the operations and investments of these two Korean semiconductor enterprises in China, enabling them to delineate their global business strategies over an extended horizon.

Samsung, in a formal statement, expressed that uncertainties linked to their semiconductor production lines in China have been substantially reduced, owing to intensive coordination with the relevant authorities. SK Hynix mirrored this sentiment in their proclamation, welcoming the decision to extend the exemption from export control regulations and expressing confidence that this resolution will bolster the stability of the global semiconductor supply chain.

Given the colossal scale of Samsung and SK Hynix’s semiconductor investments in China, where the production capacity of these factories exceeds 40% and sales in mainland China are substantial, any restrictions would profoundly impact both operations and sales. In the ensuing years, these facilities will grapple with equipment upgrades, and a one-year license previously granted by the U.S. Department of Commerce evidently falls short of these enterprises’ requirements. Presently, factories of Samsung and SK Hynix in China have been designated as ‘Validated End Users (VEU)’, obviating the need for individual permissions for every instance, implying they are unencumbered by further licensing procedures or time constraints.

Statistical data reveals that approximately 40% of Samsung’s NAND flash chips are produced in its Xi’an factory, while about 40% of SK Hynix’s DRAM chips are manufactured in its Wuxi facility, with another 20% of NAND flash chips originating from its Dalian plant. Furthermore, Samsung boasts packaging facilities in Suzhou, while SK Hynix’s packaging plant stands in Chongqing.