South Korean computer chipmaker, SK Hynix said Wednesday it might be forced to sell its manufacturing operations in China if a US crackdown on exports of semiconductor technology and manufacturing equipment to China intensifies.
SK Hynix's chief marketing officer, Kevin Noh, raised those
concerns during a conference call on Wednesday after the company reported its
operating profit dropped 60 percent in the last quarter from 2021, a decline it
blamed on a deteriorating business environment.
Global inflation amplified by Russia's war on Ukraine and
rising interest rates imposed by central banks to counter surging prices have
slowed consumer spending on the kinds of high-tech products requiring computer
chips. SK Hynix and other semiconductor makers are also navigating new US
restrictions on exports of advanced semiconductors and chipmaking equipment to
China. Such limits were in part imposed to prevent the use of American advanced
technology in China's military development.
SK Hynix said this month that the US Department of Commerce
granted the company a one-year exemption from such requirements, allowing it to
provide equipment and other supplies to its Chinese factories making memory
chips.
Other major chip and chip-manufacturing equipment makers
like Samsung and TSMC are thought to have also gotten exemptions.
SK Hynix may find it difficult to equip its manufacturing
line in the eastern Chinese city of Wuxi with the most advanced chipmaking
machines, including extreme ultraviolet lithography (EUV) systems, Noh said. He
said SK Hynix doesn't expect major disruptions at the plant at least until the
late 2020s, but things could quickly turn for the worse if Washington refuses
to extend temporary exemptions at some point and begins to fully enforce its
export controls.
“If it becomes a situation where we would have to obtain
(US) license on a tool-by-tool basis, that will disrupt the supply of
equipment…and we could face difficulties in operating (Chinese) fabrication
facilities at a much earlier point than the late 2020s,” Noh said.
“If we face problems that make it difficult for us to
operate our Chinese fabrication facilities including the Wuxi plant, we are
considering various scenarios, including selling those fabrication facilities
or their equipment or bringing them to South Korea," Noh said.
He said those contingency plans would apply to a “very
extreme situation," and the company hopes to avoid such problems and
operate as normal.
Citing an “unprecedented deterioration” in market
conditions, SK Hynix said it would cut its investment next year by more than 50
percent as it anticipates supply will continue to exceed demand for the time
being. The country's operating profit for the three months through September
was at KRW 1.65 trillion, compared to KRW 4.17 trillion during the same period
last year. Revenue fell 7 percent to KRW 10.98 trillion won.
Some experts say that the US-China technology standoff could
force SK Hynix and Samsung Electronics, another major South Korean chipmaker,
to significantly modify their Chinese operations over the next few years.
According to market analysis firm TrendForce, SK Hynix's
Wuxi plant accounts for about 13 percent of the world's total DRAM production
capacity. About 40 percent of Samsung's NAND flash chips are reportedly
produced from its factory in the Chinese city of Xi'an, accounting for around 10
percent of global production.
“The existing (principles) we accepted as common sense, such
as finding a certain region where we could produce most efficiently at the
cheapest cost and shipping those products globally, are becoming increasingly
uncertain as (our) decision making is being influenced by various layers of
factors beyond just business," Noh said.
Samsung, the world's largest provider of memory chips, is
widely believed to have received a similar exemption from the US restrictions,
although the company has not publicly confirmed it. Noh during the call said SK
Hynix's “competitors” have also been granted the US waivers, in a possible
reference to Samsung and TSMC.
0 comments:
Post a Comment