Tech war: US waiver of China export restrictions on advanced semiconductor equipment to South Korea’s Samsung and Hynix to make life harder for rival mainland chip makers

The US government’s recent decision allowing South Korea’s Samsung Electronics and SK Hynix to buy advanced manufacturing equipment for their semiconductor plants in mainland China is expected to make life more difficult for rival domestic memory chip makers like Yangtze Memory Technologies Co (YMTC), according to analysts.

In a major concession to Seoul, Washington has granted both Samsung and Hynix an indefinite waiver on broad restrictions to export advanced chip-making equipment to the mainland, which currently accounts for about a third of the global NAND Flash memory and DRAM market.

The waiver is also expected to benefit suppliers of advanced chip-making equipment and materials, while putting rival Chinese memory chip makers like US-blacklisted YMTC at a disadvantage, according to analyst Wang Lifu of semiconductor consultancy ICWise. “Had the US not granted a waiver [to the two South Korean firms], YMTC would have benefited [from demand in the local market],” Wang said.

The Biden administration’s latest action has effectively handicapped YMTC and other Chinese chip makers in their home market, following the US Department of Commerce move last October to impose export controls on chip-making machinery to the mainland.

Along with Samsung and Hynix, Taiwan Semiconductor Manufacturing Co, the world’s largest contract chip maker, had earlier secured a one-year authorisation from Washington to continue its operations on the mainland without additional licensing requirements otherwise required by the US Commerce Department. It is unclear whether TSMC will be granted the same indefinite waiver as the two South Korean firms.