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US makes it harder for SK Hynix, Samsung to make chips in China

Daniel Nenni

Daniel Nenni

Admin
Staff member
0b2b9db265f8d4b8687afea679f36159

FILE PHOTO: Illustration shows U.S. flag and Intel chip

(Reuters) -The United States is making it more difficult for chipmakers Samsung and SK Hynix to produce chips in China by revoking authorizations

The U.S. Commerce Department has revoked exemptions granted in 2022 to companies including Samsung Electronics, SK Hynix, and Intel, which allowed the sale of U.S. semiconductor equipment to China without licenses. These firms must now obtain licenses for such exports, with the revocations taking effect in 120 days. Intel, however, sold its Dalian, China unit earlier this year. The department stated it will approve licenses for maintaining existing facilities in China but not for capacity expansions or technology upgrades.

South Korea's industry ministry expressed concerns, emphasizing the need for stable operations of its semiconductor firms in China to support the global supply chain, and pledged ongoing discussions with the U.S. to mitigate impacts. The change is expected to reduce sales to China for U.S. equipment manufacturers like KLA Corp, Lam Research, and Applied Materials, none of which commented.

This move aligns with ongoing U.S.-China trade tensions, including a tariff truce extending to November with 30% U.S. levies on Chinese imports and 10% Chinese duties on U.S. goods. A June White House statement indicated preparations for potential breakdowns in trade talks, though a July tariff deal remains unsigned following a summit between South Korean President Lee Jae Myung and U.S. President Donald Trump.

Experts like Chris Miller, author of "Chip War," noted that the policy could hinder Korean chipmakers' production of advanced chips in China, potentially benefiting domestic Chinese suppliers and U.S. competitor Micron in the memory sector. However, without further actions against Chinese firms like YMTC and CXMT, it risks boosting Chinese market share at Korea's expense.

Additionally, the revocation ends Validated End User (VEU) status for foreign chipmakers like Samsung and SK Hynix, complicating U.S. exports. This occurs amid a backlog of thousands of U.S. license applications for China exports, including billions in semiconductor equipment.

 
Idiotic. SK Hynix at one point had all of its memory fabs in China. Because of the Chinese government support. SK Hynix would not have had the capital to build those fabs otherwise. They are building new fabs in South Korea but this takes time and lots of capital they would rather not spend.

Samsung also has many memory fabs in China.

CXMT and YMTC produce memory just fine despite US sanctions. Which means Chinese tool vendors already replaced Lam, Applied Materials, KLA and their ilk in memory.

CXMT already produces DDR5 and LPDDR5 memory plus they are working on HBM3.
YMTC has competitive VNAND.

If the South Korean memory vendors get encumbered this will just mean Chinese memory vendors will get their market share.
 
samwilde said:
CXMT and YMTC produce memory just fine despite US sanctions. Which means Chinese tool vendors already replaced Lam, Applied Materials, KLA and their ilk in memory.
Click to expand...

More likely they got good with lawyering their way around trade restrictions. Otherwise they wouldn't be job posting about hiring specialists with experience working on AM's latest hardware.
 
Explain AMEC's revenue growth then.
www.digitimes.com

China-based etching powerhouse AMEC posts 44% revenue gain, expands into epitaxy systems

Advanced Micro-Fabrication Equipment (AMEC) reported sharp first-half 2025 revenue growth, driven by robust demand for advanced etching systems used in cutting-edge logic and memory manufacturing.
www.digitimes.com
biz.chosun.com

YMTC achieves 45% domestic equipment rate amid U.S. semiconductor sanctions

YMTC achieves 45% domestic equipment rate amid U.S. semiconductor sanctions Chinas semiconductor industry sees rapid growth in local equipment usage despite international sanctions
biz.chosun.com biz.chosun.com
 
Last edited:
samwilde said:
Explain AMEC's revenue growth then.
www.digitimes.com

China-based etching powerhouse AMEC posts 44% revenue gain, expands into epitaxy systems

Advanced Micro-Fabrication Equipment (AMEC) reported sharp first-half 2025 revenue growth, driven by robust demand for advanced etching systems used in cutting-edge logic and memory manufacturing.
www.digitimes.com
biz.chosun.com

YMTC achieves 45% domestic equipment rate amid U.S. semiconductor sanctions

YMTC achieves 45% domestic equipment rate amid U.S. semiconductor sanctions Chinas semiconductor industry sees rapid growth in local equipment usage despite international sanctions
biz.chosun.com biz.chosun.com
Click to expand...
If this is the case, China should be happy to see the U.S. restrict Samsung and Hynix from importing American Wafer Fab Equipment (WFE) because it's a great opportunity for AMEC and Naura Technology. Why condemn?
 

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Ignore the CCP's propaganda and look at the revenue. Compare the 2024 revenue of AMEC and Naura for etch，deposition, and diagnostic WFE with the China sales figures for Lam, Applied Materials (AMAT), and KLA. The self-sufficiency rate for etcher is 15-20%, for deposition tool it's around 8-9%, and for diagnostics it's less than 1% similar to lithography tool.
 
AMEC still has limited production capacity so they focus etcher sales on the memory makers which are sanctioned to hell and back. And they only started selling deposition tools for chip making recently I think.

They started selling tungsten CVD tools only last year.

As more chip companies qualify the deposition tools and production ramps up their share in the deposition segment should also grow.

All these major Chinese semi tool companies are doubling production every 2 years so their share will go up.

As for inspection tools, several vendors have popped up since the US sanctions on those started.
www.digitimes.com

As US-China tech decoupling deepens, Chinese firm breaks ground in advanced chip inspection equipment

As tensions escalate between the US and China over semiconductor technology, China has placed domestic innovation in chipmaking tools at the center of its national tech strategy. In a significant milestone, Chinese firm Skyverse Technology announced that its REDWOOD-900, a domestically developed...
www.digitimes.com

It is a question of time until at least a couple take hold on the market.

In fact I doubt the inspection tool makers are even being properly accounted yet.

You also have companies like SiCarrier which popped out of stealth mode only recently.
www.techpowerup.com

Chinese SiCarrier Shows a Complete Silicon Manufacturing Flow: Deposition, Etching, Metrology, Inspection, and Electrical Testing

SiCarrier, a Huawei-backed Chinese semiconductor tool manufacturer, has launched a comprehensive suite of semiconductor manufacturing tools at this year's Semicon China. These tools are strategically essential to China's semiconductor self-sufficiency and a major step towards competitive nodes...
www.techpowerup.com www.techpowerup.com
 
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It is easy to make no base forecast than to make a sale, while I heard lot of complaints on the so called WFE localization from engineers in the Chinese fabs. Money won’t cheat while China imported $39b WFE from the west and its domestic WFE manufacturers only sold less than $4b in 2024 even great leap has been claimed. Let alone high percentage of the sub system and components of those so called localization are imported too.

The core of the problem is that the entire WFE supply chain depends on Western technology and components. What's the point of heavily promoting "domestication" or "localization" beyond deceiving the public?
 
And how much of the money on imports is from lithography? Vs how much is Applied Materials, Lam, or KLA. The US tool makers.

TEL claims the nine top Chinese WFE makers already sell as much in China as they do. TEL get 40% of their sales from the Chinese market.
asia.nikkei.com

Tokyo Electron targets faster chip tool production as China rivals rise

New development capabilities in Japan to help produce equipment 3 times faster
asia.nikkei.com asia.nikkei.com

You can bet the Chinese are focusing on removing the US tool makers from their market first.
 
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In fiscal year 2024, China accounted for approximately 37% of Applied Materials’ total revenue. 39% for LAM and 36% for KLA.
 
samwu1998 said:
In fiscal year 2024, China accounted for approximately 37% of Applied Materials’ total revenue. 39% for LAM and 36% for KLA.
Click to expand...

China binge bought (or panic bought) large amount of equipment from international vendors over the last 2 years because of big fear that such supplies may get cut off by Trump without pre-warning. They clearly over bought and now such equipment often sitting with low utilization or some even in "warm shut down". Will need a couple or more years to digest these over capacity but on the other hand over capacity is not news in China.
 
Jert said:
China binge bought (or panic bought) large amount of equipment from international vendors over the last 2 years because of big fear that such supplies may get cut off by Trump without pre-warning. They clearly over bought and now such equipment often sitting with low utilization or some even in "warm shut down". Will need a couple or more years to digest these over capacity but on the other hand over capacity is not news in China.
Click to expand...
Yes — the trend of China heavily relying on imported WFE has been going on for much more than 10 years.
In the past 10 years (2014–2024), China imported approximately $280 billion worth of wafer fab equipment (WFE) from the west.
 
Better to buy WFE than to hold on to US Treasuries.

Anyway, I do not understand this WFE hoarding argument. Just SMIC, Hua Hong, CXMT, and YMTC built fab shells for more than 800k wpm capacity over the past two years.

The Chinese can build a fab shell in a single year. SMIC alone built like five simultaneously. Three large ones and two smaller ones.
 
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The advanced parts of advanced Hynix and Samsung tools in China will not be sold without a license. That's part of the embargo since otherwise you could work around it by buying a basic tool an d the advanced parts and install those parts and viola now you have in your possession a proscribed advanced tool. This news is a further complication for Hynix and Samsung who will now probably have to canibalize or second source advanced parts to continue China operations. Its comparable to a vendor EOL notice. Its not the end of the world but not exactly business as usual.
 
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