China’s Micron ban highlights chipmakers’ dilemma as Sino-US tensions rise

content

SEOUL — China’s ban on the use of U.S.-based Micron Technology chips in certain sectors, announced on Sunday, is a stark reminder of the risks the industry faces. the global chip industry faces as it prepares for escalating Sino-US trade tensions.

China’s move against Micron, the largest US memory chip maker, is seen by many as retaliation for Washington’s efforts to limit Beijing’s access to key technology. It comes just a day after the Group of Seven (G7) rich nations agreed they would seek to “reduce risks, not decouple” from China, and as Washington pressured its allies to I have to join in restricting the export of chip equipment to China.

content

content

Micron, which makes DRAM and NAND flash memory chips, is the first US chipmaker targeted by Beijing after Washington over the past year announced a series of export controls aimed at blocking some chips and Chip manufacturing technology is used to enhance China’s military capabilities.

While the move could benefit Micron’s main rivals – South Korea’s Samsung Electronics and SK Hynix – in the near term, analysts say growing geopolitical tensions have overshadowed cast a shadow over the industry as companies need to navigate rising uncertainties that could affect investment and supply chain management.

Such tit-for-tat policies will make investment decisions difficult for all chipmakers, said Kim Sun-woo, an analyst at Meritz Securities in Seoul. “Companies have to deal with both production and sales. It would be better if production and sales took place in the same place, but this will further divide the two sides,” he said.

content

content

Just days before the ban, Micron announced plans to invest up to 500 billion yen ($3.7 billion) in Japan’s ultraviolet technology, becoming the first chipmaker to bring the chipmaking technology first. this to Japan. Tokyo is trying to revive its chip sector, while the United States is increasingly urging its allies to work together to combat Chinese chips and advanced technological developments.

Micron, which generated about 11 percent of its revenue from chip sales in mainland China in the last fiscal year, did not immediately respond to Reuters’ request for comment on whether Beijing’s decision could be made. affect the company’s investment plan in Japan or not.

Changhan Lee, vice president of the Korea Semiconductor Industry Association, said: “It takes a large amount of priority investment to become a chip maker and it takes 5 years, 10 years to break even on those investments. investment, so putting predictability in jeopardy makes investing difficult.” .

content

“In the long run, this is not going to help anyone.”

LOCKED IN THE BETWEEN

While the costs of chip factories vary by capacity, chip type, and country, the industry is one of the most capital-intensive manufacturing sectors, requiring cleanroom construction and purchasing of equipment. Sophisticated chip manufacturing tools. For example, Samsung spent a total of about 60 trillion won ($45.4 billion) to build its two chip factories in Pyeongtaek, South Korea.

In China, Samsung and SK Hynix, the world’s No. 1 and No. 2 memory chip makers, have invested billions of dollars in their chip factories, importing some equipment such as engraving machines from the United States. Ky. When Washington announced restrictions on exporting chip manufacturing to China last October, it issued one-year waivers to Samsung and SK Hynix so they could import tools without having to apply for a license, but whether that waiver will be extended remains unclear.

content

“It would have been better to set up the most efficient production base considering fixed costs and wages, but a large variable called regulation was added. It’s more complicated,” said Kim at Meritz.

Analysts recommend accepting the rounds of the Sino-US trade war as-is, while memory chip imports could emerge in response to any geopolitical pressure.

The White House has asked South Korea to urge its chipmakers, the world’s largest maker of memory chips, not to fill any market gaps in China if sales of Micron products are restricted. , as reported by the Financial Times last month.

“(Korean chipmakers) are stuck in the middle and bothered by the parties,” said Kim at Meritz.

Neither Samsung nor SK Hynix were available for comment.

“The war for hegemony between the US and China will continue,” said Lee Min-hee, an analyst at BNK Investment & Securities.

“Now chips, later rare earths, raw materials… This will continue.”

($1 = 1,320,9300 won) (Reporting by Joyce Lee in Seoul and Josh Ye in Hong Kong; Editing by Miyoung Kim and Susan Fenton)