'US-China Tech Competition Battlefield'... "Korea Finds It Difficult to Comply with Micron Replacement Ban in China"

Ministry of Economy and Finance Sponsored US Report
Analysis of 'Benefits and Costs' for Korean Companies

A U.S. expert analysis has emerged stating that it is practically difficult for Korean semiconductor companies to fill the gap left by the American semiconductor company Micron, which China has banned from selling. This is due to the poor semiconductor market conditions, the difficulty of refusing orders from China, and the high risk of exposure to antitrust lawsuits.

On the 6th (local time), the Peterson Institute for International Economics (PIIE) released a 14-page report titled "The Benefits and Costs of U.S. Semiconductor Export Controls on Chinese-bound Products for Korean Companies," stating that "as export controls have become a battleground in the U.S.-China technology competition, Korean companies, which have about 40% of their production share in China, have been put in a difficult position."

Regarding the simultaneous pressure from both U.S. political circles and the industry that Korean companies should not fill the gap left by Micron, which was expelled from China, the report argued that effectively implementing a 'backfill' agreement would be difficult.

Martin Chorzempa, a senior researcher at PIIE who authored the report, pointed out that memory semiconductors produced by Micron and Samsung Electronics, SK Hynix are sold through various channels such as distributors, and with market conditions improving from the second half of this year, it is difficult to determine whether new incoming orders are truly backfilling Micron's void.

[Image source=Reuters Yonhap News]

He also provided an analysis that refusing orders from China is difficult amid poor semiconductor market conditions and that there is a risk of exposure to antitrust lawsuits.

He predicted that Samsung Electronics and SK Hynix would face significant costs if they refuse new orders coming from China. Unlike ASML of the Netherlands, which participates in semiconductor equipment export controls and has many customers outside China, so it does not have to worry about revenue decline, memory semiconductors are currently facing poor market conditions.

Additionally, he pointed out that due to the cyclical nature of the market, which changes periodically, it is difficult to decide at which point in time sales should be used as a basis for agreeing on a backfill ban. He also noted that an agreement to maintain the existing market shares of Micron and Korean companies should be made at the government level; otherwise, there is a risk of antitrust lawsuits due to collusion issues.

Regarding semiconductor equipment export controls, he evaluated that there is a part where Korean companies have benefited by blocking Chinese semiconductor companies competing with them from acquiring advanced equipment.

He further stated that profiting from tensions between major powers carries serious risks and will bring much greater uncertainty to companies and governments, urging that long-term solutions should be prepared to resolve the difficulties faced by Korean companies.

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