Insiders revealed the Biden administration intends to exempt SK Hynix (005930.KS) & Samsung (005930.KS) from the impact of new Chinese memory chipmaker limitations intended to impede Beijing’s technology ambitions and hinder its military development.
According to the sources, requests from American suppliers to send equipment to Chinese companies like Yangtze Memory Technologies Co Ltd (YMTC) as well as ChangXin Memory Technologies, Inc (CXMT) that produce advanced DRAM or flash memory chips will likely be turned down by the Commerce Department, which this week plans to announce new restrictions on technology exports to China.
They also added that however, licence requests to sell gear to foreign businesses that manufacture advanced memory components in China would be examined on a case-by-case basis, potentially allowing them to obtain the machinery.
One of the persons briefed on the subject claimed the intention is not to harm non-indigenous businesses.
Both the Commerce Department and the White House declined to comment. Requests for a response from SK Hynix Inc, Electronics Co Ltd, Samsung, CXMT, and YMTC went unanswered.
The impending guidelines were referred to as “sci-tech hegemony” on Thursday by the Chinese Embassy in Washington. The United States was charged with stifling the growth of underdeveloped nations and growing markets by utilising its technological superiority.
The action may allay the deepest worries of South Korean memory chip manufacturers that the United States may stifle their China-based production business to derail China’s rise, devastate YMTC, and defend weak U.S. memory chip manufacturers.
However, they continue to be concerned that the specific instance review requirement is far from a clear-cut approval for the transport of American technology to their Chinese plants and can lead to disagreements with authorities about which shipments to approve.
Unreported previously are some of the new restrictions that affect memory chip manufacturers in China.
The new restrictions are directed at Chinese manufacturers of NAND and DRAM chips, which are used to store data and files and to temporarily store information from programmes on a system.
When selling to companies making DRAM chips just above an 18-nanometer node, logic circuits above 14 nanometers, or NAND Flash chips below 128 layers, U.S. vendors do not need to apply for a licence from the Commerce Department, sources revealed.
Nonetheless, U.S. companies trying to sell sophisticated technology to local Chinese chipmakers would have to obtain a license and have it reviewed under the strict “presumption of denial” standard if they produced logic chips smaller than 14 nanometers, NAND flash chips with more than 128 layers, or DRAM chips smaller than 18 nanometers.
The sources noted that licences would be necessary for U.S. suppliers that wanted to sell the gear to non-Chinese origin businesses operating in China and making the same kinds of chips, although individual licence requests would be considered on a case-by-case basis.
Export control experts stated if the rules are published as anticipated, it would be the first attempt by the United States to use export controls to reach China’s production of memory chips without specific military applications, reflecting a broader understanding of American national security.
They would also strike YMTC, a 2016-founded growing force in the NAND chip industry. According to a June 2021 report from the White House, its growth and low-cost offers pose “a direct danger” to Western Digital Corp. and Micron Technology Inc., both of whom are domiciled in the United States.
It is known that the United States was contemplating restricting supplies of American chipmaking technology to memory chip manufacturers in China, including YMTC, to slow down China’s advancements in the semiconductor industry and defend American businesses.
It was made public last month that the Biden government intended to broaden restrictions on American shipments of semiconductors used in chip manufacturing and artificial intelligence to China in October.
