US export waivers are revoked for Samsung, SK Hynix and Intel, putting Chinese operations and the global chip supply chain at grave risk
Another shockwave is heading for the semiconductor industry — the Samsung SK Hynix Intel China ban. The Trump administration, Bloomberg reports, has even gone so far as to stop those same chipmakers from sending US-made equipment to their own Chinese fabs, which could trigger an earthquake beneath the world’s memory market. Chinese sites account for almost 10% of DRAM and 15% of NAND storage, and so this decision could have far-reaching consequences.
What led to the Ban of Samsung SK Hynix Intel China?
Special waivers — which were previously exempted under the Biden administration — have been withdrawn by the Commerce Department. The waivers, in turn, enabled Samsung, SK Hynix, and Intel to ship sophisticated semiconductor tooling out of the US to China without going through a process to reapply for an export licence each time. And now, with only 120 days before the waivers run out, these tech behemoths need to get creative.
Under Secretary of Commerce for Industry and Security Jeffrey Kessler stated that the administration is working to close gaps in their export controls. This wider scheme to reduce China’s access to advanced chipmaking technologies, keeping US companies competitive is the idea behind the ban on Samsung SK Hynix Intel China.
What Does the Samsung / SK Hynix Intel China Ban Mean?
High stakes for Samsung, SK Hynix South Korean titans Samsung and SK Hynix have the most at stake. The two companies run the largest Malaysian fabs that produce memory chips within China for export. This could lead disappointing output and possible decisions about moving to less modern equipment or even relocating production lines outside China
And Intel, in contrast, could find itself propagating at a disadvantage in China in semiconductor. The Samsung SK Hynix Intel China ban will apply pressure to global memory chip supply by reaching production pipelines essential for PC, smartphones, and servers, and analysts at Bernstein are forecasting dramatic strain on the global memory chip supply as a result.
Samsung SK Hynix Intel China Ban Trade War Perspective
Well, the timing of the Samsung SK Hynix Intel China ban is interesting. The announcement comes even as the US and South Korea are also negotiating politically sensitive trade, including with tariffs. Targeted at memory manufacturers in South Korea, the Trump administration may use this as a bargaining chip.
Additionally, this development risks straining already strained USChina relations even further. Such hostile trade measures could further jeopardize the ongoing negotiations threatening political and economic relations stability.
Samsung gives its stocks a price-earnings ratio of between 6 to 9 per share, which means that its value could be denigrated to $15-$25 per share over the long term if that erases consumer demand chips.
Without a compromise, Samsung and SK Hynix will need to revise their entire plans. We could move fabs to outside China, but that would need a huge amount of investment and time. You can also downgrade to older-generation chip technologies, but that risks losing a step to competitors like Micron and TSMC.
And the pressure is no less intense for Intel. To target this Samsung SK Hynix Intel China ban, it could reduce its market share for servicing one of the world largest semiconductor markets – thus putting its future growth opportunities at taser.
What is certain is that the ruling will reorder semiconductor supply chains around the world, leaving to major firms with Chinese production centers to rethink their reliance on those sites.
FAQ
While the “ban” mentions revoking export waivers that permitted Samsung, SK Hynix, and Intel to transfer US-made equipment to their Chinese fabs.
For DRAM and NAND, fabs in China produce approximately 10% and 15% respectively. The restriction would impact memory, which would affect PCs, mobile phones, and servers around the world.
The Trump administration has focused on partially closing those export loopholes that give an advantage to Beijing as it develops advanced semiconductor technologies.
Production may need to shift elsewhere, tools may need to roll back generations, and some new trade deals may have to be hammered out, so that some type of operation can continue.
Yes. The ban between Samsung, SK Hynix, and Intel in China could lead to more trade tensions and make negotiations between Washington and Beijing difficult.
