US Supply Cutoff to Huawei Imminent... Inevitable Impact on Korean Semiconductor and Display Industries

Additional US Sanctions Starting from the 15th
Supply Disruptions for Samsung and SK Hynix

[Asia Economy Reporter Dongwoo Lee] As the U.S. imposes additional sanctions on Chinese IT company Huawei starting from the 15th, domestic semiconductor and display companies are expected to face inevitable setbacks.

According to industry sources on the 12th, the upcoming U.S. sanctions on Huawei, China's largest telecommunications company, are expected to directly reduce the earnings of Samsung Electronics, SK Hynix, and others.

The reason Samsung Electronics and SK Hynix will no longer be able to supply memory semiconductors to Huawei is that the additional sanctions prohibit supplying semiconductors produced using U.S. equipment, software, and design without prior approval from the U.S. government.

The industry estimates that Samsung Electronics' sales from transactions with Huawei amounted to approximately 7.3 trillion KRW last year, while SK Hynix's sales were around 3 trillion KRW. This means that about 10 trillion KRW in annual sales will be impacted by the sanctions.

The display industry, which supplies panels to Huawei, is also affected as display panel driver chips are included in the U.S. sanctions.

Huawei recently decided to switch all smartphone panels, from mid-range to flagship, to OLED (Organic Light Emitting Diode), raising expectations for a significant increase in supply from Samsung Display.

In response, Samsung Display recently made an official request to the U.S. government to permit the export of display components to Huawei. LG Display, which also supplies OLED panels for smartphones to Huawei, is reportedly reviewing a request for export approval from the U.S. government.

Experts predict that if the U.S. government's sanctions on Huawei continue, a decline in the performance of related domestic companies due to supply disruptions in the fourth quarter of this year will be unavoidable. Market research firm TrendForce forecasts that due to contraction in the server and mobile DRAM markets, DRAM prices will fall by about 10% in the fourth quarter compared to the third quarter.

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