"US Semiconductor Restrictions on China Expected to Alleviate Concerns for Equipment Companies"

Korea Investment & Securities analyzed on the 4th that the announcement of the U.S. semiconductor regulations targeting China would somewhat alleviate market concerns about overseas semiconductor equipment companies.

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The U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced a revision on the 2nd (local time) to strengthen export controls on semiconductors to China. The stated purpose of the revision is to suppress the use of advanced semiconductor technology in China's military modernization and artificial intelligence (AI), and to protect the national security of the U.S. and its allies. Key points include export restrictions on major semiconductor equipment and software tools, strengthened regulations on high-bandwidth memory (HBM) and AI-related technologies, and expanded regulations on certain semiconductor equipment produced abroad.

Moon Seung-hwan, a researcher at Korea Investment & Securities, said, "This announcement is expected to somewhat ease market concerns about overseas semiconductor equipment companies," adding, "The first notable point is that while most major Chinese semiconductor equipment localization companies were included in the export restriction list, Changxin Memory Technologies (CXMT), a major customer of U.S. semiconductor equipment companies, was excluded."

Researcher Moon continued, "The second point is that with the expansion of the Foreign Direct Product Rule (FDPR), equipment utilizing technology from the U.S., the Netherlands, and Japan produced in third countries and imported into China has been completely blocked," and added, "Until now, major semiconductor equipment companies had a high base of sales to China as Chinese semiconductor manufacturers accelerated equipment deliveries in preparation for tightened export controls, but from the second half of this year, sales have stabilized and declined, and normalization is expected next year." He further noted, "With this revision announcement, AI semiconductor equipment investments centered on TSMC remain steady, and the stability of legacy sales to China, which the market had been concerned about, has also been secured, which is positive."

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