Samsung, SK Hynix to be spared onslaught of US Chinese chip crackdown, sources say

China’s embassy in Washington on Thursday called the expected rules “sci-tech hegemony.”

The Biden administration plans to spare SK Hynix and Samsung from an onslaught of new restrictions on memory chip makers in China aimed at thwarting Beijing’s technological ambitions and blocking its military advances, the sources said.

The Commerce Department, which plans to ease new restrictions on technology exports to China this week, is likely to reject requests from U.S. suppliers to send equipment to Chinese firms such as Yangtze Memory Technologies Co Ltd. (YMTC) and ChangXin Memory Technologies, Inc. ( CXMT ) if they make advanced DRAM or flash memory chips, the sources said.

However, requests for licenses to sell devices to foreign companies making advanced memory chips in China will be reviewed on a case-by-case basis, the sources said, potentially allowing them to receive the devices.

“The goal is not to hurt non-native companies,” said one of the people briefed on the matter.

The White House and the Commerce Department declined to comment. SK Hynix Inc., Samsung Electronics Co Ltd., YMTC and CXMT did not respond to requests for comment.

China’s embassy in Washington on Thursday called the expected rules “sci-tech hegemony.” She accused the United States of using its “technological capabilities … to cripple and stifle the development of emerging markets and developing countries.”

The move could allay the worst fears of South Korean memory chip makers that the United States could cripple their Chinese manufacturing business in an attempt to thwart China’s rise, cripple YMTC and protect vulnerable US memory chip makers.

But they still worry that the case-by-case review standard is far from an explicit green light for US equipment to be shipped to their Chinese facilities and could lead to wrangling with regulators over what shipments to approve.

Details of some of the new regulations facing memory chip manufacturers in China have not been previously announced.

The new curbs target Chinese makers of DRAM chips, which store information from applications while the system is in use, and NAND chips, which are used to store data and files.

U.S. suppliers looking to supply equipment to China-based semiconductor firms would not have to apply for a license from the Commerce Department if they sold to firms making DRAM chips above the 18-nanometer node, NAND Flash chips below 128 layers or logic chips above 14 nanometers, the sources said .

However, U.S. companies selling sophisticated technology to domestic Chinese chipmakers producing DRAM chips with a thickness of 18 nanometers or less, NAND flash chips with 128 layers or higher, or logic chips with a thickness of 14 nanometers or less would have to apply for a license that would be reviewed by a strict standard ” presumption of denial”.

US suppliers looking to sell equipment to non-Chinese companies operating in China and making the same types of chips would also face a license requirement, but applications would be reviewed on a case-by-case basis, the sources added.

If the rules are published as expected, they would be the first U.S. bid through export controls to target Chinese manufacturing of memory chips without specialized military applications, which export control experts say represents a broader take on U.S. national security.

They would also hit YMTC, a growing powerhouse in NAND chip manufacturing founded in 2016. Its expansion and low-cost offerings pose a “direct threat” to U.S.-based Micron Technology Inc. and Western Digital Corp., the White House said in a statement. June 2021 report.

YMTC is already under investigation by the Commerce Department over whether it violated U.S. export controls by selling chips to Chinese telecom company Huawei Technologies Co Ltd. Its chips are evaluated by Apple Inc. for inclusion in some of its iPhones in China, which is a big concern. for US lawmakers and the Biden administration.

The rules could also hurt CXMT, a state-backed Chinese company seeking to enter the DRAM market.

LAM Research Corp., Applied Materials Inc. and KLA Corp., major U.S. vendors of chip-making equipment, are likely to be affected by the restrictions. LAM and Applied Materials did not respond to requests for comment. The UCK refused to comment.

South Korea’s Samsung has a NAND Flash memory chip manufacturing plant in China’s Shaanxi province. South Korean competitor SK Hynix bought Intel Corp. to manufacture NAND flash memory chips in Dalian and manufacture DRAM chips in another plant in China.

According to consulting firm Yole Intelligence’s Walt Coon, 25% of SK Hynix’s NAND wafer production and 38% of Samsung’s are based in China, and about 50% of SK Hynix’s DRAM production is in China.

Reuters first reported that the United States was considering limiting supplies of US chip-making equipment to memory chip makers in China, including YMTC, as part of efforts to halt progress in China’s semiconductor sector and protect US companies.

Reuters also reported last month that the Biden administration planned to extend restrictions on US shipments to China of semiconductors used for artificial intelligence and chip-making tools in October.