U.S.- China Tech War Clouds SK Hynix Plans For A Key Chip Factory

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SK Hynix’s plans to rebuild a massive factory in China so it can create memory chips more effectively are in peril, according to individuals familiar with the situation, since U.S. officials do not want advanced equipment needed in the process to enter China.

The prospective setback might make SK Hynix, one of the world’s largest makers of DRAM memory chips used in everything from smartphones to data centers, the next casualty of the US-China geopolitical conflict.

According to three sources with knowledge of the topic, SK Hynix’s manufacturing plans call for the business to update a mass production facility in Wuxi, China, with some of the most advanced extreme ultraviolet lithography (EUV) chipmaking machines built by Dutch manufacturer ASML.

The US has previously opposed on the grounds that sending such advanced weapons to China may be used to enhance the country’s military.

A senior White House official declined to comment on whether the US government would authorize SK Hynix to bring EUV tools to China.

However, the individual told Reuters that the Biden administration is still focused on stopping China from utilizing US and ally technologies to create cutting-edge semiconductor production that would aid China’s military modernization.

Read More: UPDATE: 1-U.S. House, Senate Will Negotiate On China Tech Bill

The Wuxi facility is essential to the worldwide electronics industry since it produces almost half of SK Hynix’s DRAM chips, accounting for 15% of the global total. Any big changes might have an influence on global memory markets, where demand is expected to climb by 19 percent in 2021 alone, according to analyst group IDC.

The magnitude of SK Hynix’s worries has not before been published. If the problem is not rectified over the next several years, SK Hynix may find itself at a competitive disadvantage with rivals such as No. 1 memory chipmaker Samsung Electronics and Micron Technology of the U.S., the other two key participants in the DRAM industry. Both Samsung and Micron are switching to ASML’s EUV equipment, but not at production locations where the machines are subject to export restrictions.

SK Hynix declined to comment on the situation, saying that it works flexibly in different market contexts and does its best to meet market and customer expectations without trouble.

The Trump administration successfully lobbied the Dutch government, with White House officials sharing a classified intelligence assessment with the country’s Prime Minister, to prevent the transfer of ASML’s technology to China’s state-backed Semiconductor Manufacturing International Corp.

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