US-China technology war clouds SK Hynix’s plans for key chip factory – Community News
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US-China technology war clouds SK Hynix’s plans for key chip factory

The potential setback could make SK Hynix, one of the world’s largest suppliers of DRAM memory chips that fit in everything from smartphones to data centers, the next victim of the geopolitical battle between the United States and China.

Plans by Korea’s SK Hynix to overhaul a massive facility in China so it can make memory chips more efficient are being jeopardized, sources familiar with the case told Reuters, as US officials don’t want sophisticated equipment added to it. used enters China.

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The potential setback could make SK Hynix, one of the world’s largest suppliers of DRAM memory chips that fit in everything from smartphones to data centers, the next victim of the geopolitical battle between the United States and China.

According to SK Hynix’s production plans, the company is to upgrade a mass production facility in Wuxi, China, with some of the latest machines for making extreme ultraviolet lithography (EUV) chips made by the Dutch company ASML, said three knowledgeable people. .

The United States has objected in the past on the grounds that sending such sophisticated instruments to China could be used to bolster the country’s military.

A senior White House official declined to comment specifically on whether US officials would allow SK Hynix to bring EUV tools to China. But the official told Reuters that the Biden administration continues to focus on preventing China from using American and related technologies to develop state-of-the-art semiconductor manufacturing that would help China modernize its military.

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The Wuxi plant is critical to the global electronics industry as it makes approximately half of SK Hynix’s DRAM chips, representing 15% of the global total. Major changes could impact global memory markets, with analyst firm IDC saying demand will grow 19% in 2021 alone.

As newer types of chips make up a larger proportion of SK Hynix’s production within two to three years, the company needs the EUV machines to control costs and accelerate production, said a source with knowledge of the company’s operations. in China.

The extent of the concerns within SK Hynix have not been previously reported. If the situation is not resolved in the coming years, SK Hynix could be at a disadvantage against rivals such as No. 1 memory chip maker Samsung Electronics Co Ltd and US Micron Technology, the other two major players in the DRAM market. Both Samsung and Micron are also migrating to ASML’s EUV machines, but are not using them in factory locations where the machines are subject to export restrictions.

The issue of the ASML machines has caused enough concern at SK Hynix that Chief Executive Lee Seok-hee raised the issue with US officials during a visit to Washington, DC in July, according to two people briefed on his visit.

SK Hynix declined to comment on the matter, adding that it operates flexibly in accordance with different market environments and does its best to respond smoothly to the market and customer requirements.

The Trump administration successfully mounted an extensive campaign to block the sale of ASML technology to China’s state-backed Semiconductor Manufacturing International Corp., and lobbied the Dutch government at White House officials who shared a classified intelligence report. with the Prime Minister of the country.

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An ASML spokesperson said the company adheres to all export control laws and considers them a “valid tool” for governments to ensure national security. But the company said the overuse of those controls “could affect the production capacity needed to stay ahead of the increasing demand for semiconductors.”

“It is likely that widespread use of export controls could exacerbate the problems in the microchip supply chain, which are already a major concern of governments and policymakers around the world because of spillovers to other industries,” such as the auto industry, he said. the spokesman. said in a statement.

Analysts don’t believe US officials would view SK Hynix’s efforts to bring an EUV instrument to China any differently than previous efforts by Chinese companies.

“They’re really caught between a Chinese rock and an American hard spot,” said Dan Hutcheson, chief executive officer of VLSIresearch, adding that the rules likely apply to all chip manufacturing operations in China, abroad or domestically. “Anyone who puts an EUV tool in China gives China the capacity. Once it’s there, you have no idea where it’s going to go next. The Chinese could always grab it or do whatever they wanted to do.”

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