Seoul has signaled it will not intervene to prevent South Korean companies Samsung and SK Hynix from filling a market gap after China banned US chipmaker Micron, escalating a tech battle between the superpowers.
Last month, the White House quietly asked South Korea to stop increasing sales to China from its chip makers if sales of Micron products were banned by Beijing.
But policymakers in Seoul said Monday they were not inclined to wade into the controversy and would defer to the companies.
“What the US tells us to do or not do is really up to our companies. Both Samsung and SK Hynix, which have global operations, will decide on this.” Samsung and SK Hynix declined to comment on the issue.
Washington unveiled tighter chip export controls on China last year and hit Huawei and several of the country’s top tech titans with sanctions. Beijing retaliated on Sunday by banning the US memory chip champion while limiting its sales in the country on cybersecurity grounds after a seven-week review.
The measures against Micron outlined by the Cyberspace Administration of China due to alleged “serious network security risks” prevent critical infrastructure operators from buying products containing the US company’s chips.
Analysts say the ban is expected to prompt makers of servers, computers and other electronics sold in China to turn to South Korean chip makers such as Samsung and SK Hynix for replacements, potentially leaving the companies vulnerable to growing geopolitical tensions. Can benefit from stress.
Samsung and SK Hynix are also working to grow business in the US and need a one-year exemption from the country so they can ship new equipment to their chip manufacturing facilities in China. The waiver should be renewed later this year, giving Washington potential leverage to use against the companies.
Shares of Samsung and SK Hynix ended the day down less than 1 percent each, buoyed by hopes of a positive impact on them from China’s move against Micron. Micron shares were down 5 per cent in pre-market trading.
“There are not many Chinese companies that only get chips from Micron. Even if we increase our supplies to Chinese customers, how can they personally check all these deals and make a decision? “Could the increased volume be replacing Micron by us?” said a senior industry executive in Seoul.
Seoul’s comments came after a three-day G7 summit in Hiroshima, where leaders pledged to tackle Beijing’s use of economic pressure.
While South Korea is not a member of the G7, the group said it would work with a wider group of partners on creating a mechanism to prevent and respond to Beijing’s use of economic sanctions to advance its geopolitical goals. .
Analysts said they expected a limited hit for Micron, which had sales of $30.8 billion last fiscal year, of which 16 percent came from companies headquartered in mainland China or Hong Kong.
Dylan Patel, principal analyst at semiconductor research group Semianalysis, said it was much easier to swap between memory chips made by the major chip groups, suggesting the long-term losses to Micron may be manageable.
“You can swap out a Micron memory part for a Samsung or SK Hynix in almost all cases without much change,” he said. “Memory is a commodity and the supply chain will adjust in a few quarters.”
Additional reporting by Qianar Liu and Eleanor Olcott in Hong Kong and Nian Liu in Beijing











