Samsung Electronics and SK Hynix Hit by Additional US Sanctions on Huawei

Two Companies Using US Equipment and Technology
On Alert for Memory Semiconductor Regulation Status

[Asia Economy Reporters Dongwoo Lee, Gimin Lee] Domestic semiconductor companies such as Samsung Electronics and SK Hynix are struggling to devise countermeasures against the U.S.'s additional sanctions on Huawei. Since the core of these sanctions is to block the supply of semiconductors made using U.S. technology to Huawei, Samsung Electronics and SK Hynix, which supply memory semiconductors to Huawei, could also be within the scope of impact.

According to the industry on the 19th, domestic semiconductor companies are engrossed in legal interpretations regarding whether memory semiconductors are included in the regulatory targets of this sanction and in preparing countermeasures. Although the U.S. Department of Commerce did not specify 'memory semiconductors' in the wording of the regulation, it defined the target as 'semiconductors produced using U.S. technology or equipment' and stated that supplying these to Huawei requires approval from the U.S. government.

Accordingly, while the first sanctions announced in May targeted only semiconductors designed or ordered by Huawei, the additional sanctions could apply not only to semiconductors designed or ordered by Huawei but also to all off-the-shelf products.

The problem lies in the fact that Samsung Electronics and SK Hynix also use U.S. technology or equipment, which could subject them to regulation. Samsung Electronics and SK Hynix use technologies such as deposition and etching equipment, as well as inspection and measurement technologies, produced by U.S. semiconductor equipment manufacturers like Applied Materials and Lam Research during memory semiconductor production.

It is known that these two companies supply Huawei with mobile DRAM such as LP (Low Power) DDR4, embedded memory like eMMC, high-spec UFS standard memory, DDI (Display Driver IC), and image sensors using such technologies. This is why the industry expects a short-term decline in sales for the domestic semiconductor sector if the U.S.'s additional sanctions are implemented.

As of the second quarter of this year, Samsung Electronics' sales from its top five customers, including Huawei, account for about 12%, approximately 6.35 trillion KRW. SK Hynix's sales proportion from Huawei is around 10%, amounting to about 1.5 trillion KRW in the first half of this year.

Park Jae-geun, Chairman of the Korea Semiconductor Display Industry Association, predicted, "In the short term, domestic companies may face issues where they cannot sell memory semiconductors to Huawei." Do Hyun-woo, a researcher at NH Investment & Securities, also forecasted, "If Huawei's smartphone manufacturing becomes more difficult in the future, some negative impact on memory semiconductor companies' sales is expected."

However, there is also an interpretation that the long-term impact on the domestic semiconductor industry will be minimal. An Gi-hyun, Executive Director of the Semiconductor Industry Association, said, "Since the products Huawei makes are not monopolistic items, the long-term impact will be limited." He explained that Chinese smartphone companies such as Oppo and Vivo could replace Huawei's demand.

An industry insider said, "If Huawei can no longer serve as a demand source, variables will arise where prices are determined through demand from other companies," adding, "Although short-term impacts are inevitable, they are expected to be diluted as an overall effect on the semiconductor industry."

This content was produced with the assistance of AI translation services.