South Korean chipmakers face balancing act between US, China for market supremacy

Seoul: Concern is growing that SK hynix‘s plan to overhaul its Chinese factory with cutting-edge chipmaking machines could be in jeopardy due to opposition from the US.

Earlier this week, US Trade Representative (USTR) Katherine Tai acknowledged that Washington had opposed such efforts by the South Korean chipmaker to bring in advanced machines to its chip fabrication plant in Wuxi, China, during a radio interview in Seoul.

“There are legitimate concerns about the risks to national security in terms of where this technology ends up,” she said, implying that such high-tech tools could be used to enhance Chinese military capabilities and other strategic industries.

The technology in question is Dutch firm ASML Holding’s extreme ultraviolet (EUV) lithography, essential to pack ever tinier transistors in microchips to make them faster, more powerful and more energy efficient, reports Yonhap news agency.

The precarious geopolitical situation SK hynix finds itself in comes in stark contrast to a recent announcement by Samsung Electronics, the world’s biggest memory chip producer, to make a $17 billion investment in the US to bolster its competitive edge in the global semiconductor industry.

Two days after Tai made the remarks, Samsung unveiled a plan to build a new chip fabrication plant in Taylor, Texas, to produce advanced chips used in applications for mobile, 5G, high-performance computing and artificial intelligence, based on the EUV technology.

Samsung has been closely working with ASML since the early 2000s for technical breakthroughs in semiconductor development. It is a close partner, an investor and also a customer to the Dutch firm.

In March last year, the South Korean tech giant became the first in the chip industry to successfully adopt the EUV technology in DRAM production.

SK hynix, the world’s second-biggest memory chip maker after Samsung, is a latecomer when it comes to application of the EUV technology.

Facing unexpected challenges, however, SK hynix sealed a five-year contract with ASML earlier this year to buy approximately 20 more EUV machines, a major investment to upgrade its facilities and enhance competitiveness.

SK hynix is estimated to have two or three EUV machines, far less than the 17-19 machines owned by Samsung and approximately 40 by Taiwan Semiconductor Manufacturing Co (TSMC).

The company’s spokesperson told Yonhap News Agency on Friday that there had been neither discussions to bring in EUV equipment to China nor an immediate plan to do so, and that it was still premature to discuss a US restriction, if any, on its plan to overhaul its Chinese plant.

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