Due to Biden's Export Controls... US Semiconductor Equipment Companies Begin Halting Support for Chinese Factories

President Joe Biden [Photo by AP News]

[Asia Economy Reporter Jeong Hyunjin] As the Biden administration in the United States moves to control semiconductor exports to China, U.S. semiconductor equipment companies have immediately taken measures such as stopping support for YMTC, a leading Chinese memory semiconductor company. Although this was a measure to block China's semiconductor dominance, it is expected that U.S. semiconductor equipment companies, which must distance themselves from China?the largest 'big spender' in the market?will inevitably face deteriorating performance.

◆ "If employees withdraw, equipment maintenance and application of new technologies will be difficult"

On the 12th (local time), the Wall Street Journal (WSJ) and Bloomberg News reported, citing sources, that major semiconductor equipment companies including KLA and Lam Research have begun to stop support for YMTC. Employees who were deployed at YMTC have temporarily withdrawn, support for existing equipment installed at YMTC has been halted, and installation of new equipment has also been temporarily suspended.

Generally, semiconductor equipment companies deploy their personnel at major customer factories to manage equipment and respond to any issues. Dozens of employees from U.S. semiconductor equipment companies are stationed at YMTC's factory. If they no longer remain on-site, customers like YMTC will inevitably face difficulties in equipment upgrades, maintenance, and application of new technologies.

[Image source=EPA Yonhap News]

Earlier, on the 7th, the U.S. Department of Commerce announced new export control measures that effectively prohibit U.S. companies from exporting semiconductor equipment to Chinese semiconductor manufacturers to prevent China from acquiring semiconductor technology. Specifically, U.S. companies must obtain separate approval if they sell equipment or technology capable of producing semiconductors with technology levels higher than ▲ 18-nanometer (nm) or below DRAM ▲ 128-layer or more NAND flash ▲ logic chips using FinFET technology (16 nm to 14 nm) to China.

WSJ evaluated, "(The moves by U.S. semiconductor equipment companies) may be temporary, but they are an immediate signal that U.S. semiconductor equipment companies and Chinese semiconductor manufacturers are experiencing business disruptions amid efforts by the U.S. to block the growth of China's semiconductor industry." Sources said that U.S. semiconductor equipment companies are reviewing what is necessary to comply with the new export regulations while doing business with Chinese customers, and the long-term impact remains unclear.

Bloomberg also reported that Dutch semiconductor equipment company ASML instructed its employees in the U.S. to refrain from servicing customers in China.

For now, domestic semiconductor companies such as Samsung Electronics and SK Hynix can supply equipment to their Chinese factories for the next year without U.S. regulations. Although individual reviews will be conducted for foreign-owned production facilities in China, this effectively grants Korean companies a one-year grace period. The U.S. Department of Commerce's notification of this policy to Samsung Electronics and SK Hynix has allowed them to breathe a sigh of relief for the time being.

◆ U.S. semiconductor equipment companies are 'suffering quietly'... sales impact inevitable

[Image source=Reuters Yonhap News]

U.S. semiconductor equipment companies are suffering quietly due to their government's export restrictions to China. As it becomes difficult to sell products to China, the 'big spender' in the global semiconductor equipment market, a decline in profits is inevitable.

Immediately, Applied Materials, the world's largest semiconductor equipment company based in the U.S., announced that it expects a hit of approximately $250 million to $550 million (about 360 billion to 790 billion KRW) in net sales for the fourth quarter of fiscal year 2022 (August to October). Accordingly, it revised its net sales forecast downward from the previously announced $6.25 billion to $7.05 billion to $6.15 billion to $6.65 billion. The company added, "We are seeking the necessary additional export licenses."

KLA and Lam Research, other U.S. semiconductor equipment companies, are also expected to face inevitable impacts. China accounts for 30% of the sales of these three U.S. companies.

Since the U.S. government announced export restrictions to China on the 7th, Applied Materials' stock price has fallen by 7.98%, KLA by 11.40%, and Lam Research by 13.57%. Compared to the beginning of the year, the declines are 52.47%, 25.77%, and 55.34%, respectively.

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