Samsung, hynix brace for fallout of China's restrictions on Micron

China's decision to impose sales restrictions against Micron put Samsung Electronics and SK hynix on tenterhooks as the Korean chip giants could come under the influence of a widening economic tit-for-tat between Beijing and Washington.

A sign marks the entrance of the Micron Technology automotive chip manufacturing plant on Feb. 11, 2022, in Manassas, Virginia. [AP]

China's decision to impose sales restrictions against U.S. chipmaker Micron put Samsung Electronics and SK hynix on tenterhooks as the Korean chip giants could come under the influence of a widening economic tit-for-tat between Beijing and Washington.

China’s Cyberspace Administration concluded in a survey that Micron products “have serious network security risks, which pose significant security risks to China's critical information infrastructure supply chain, affecting China's national security." It did not specify what the risks are.

The Boise, Idaho company posted $3.3 billion in sales in China, accounting for about 11 percent of its entire global sales.

Samsung and SK hynix have generated far higher sales from China since the two chipmakers are capable of producing high-end memory chips and processors that Chinese makers can’t.

Samsung Electronics reported 35.6 trillion won ($26.7 billion) in sales from China last year, taking up 11 percent of the total.

The 2022 figure was down 99 percent from 2021, but China remains among the major destinations for Samsung’s chip products.

A source at Samsung Electronics played down the possibility of the company being subject to the same regulation as Micron.

“The Korean companies are not in the same position as Micron,” said the source who spoke on the condition of anonymity, although he declined to comment on whether the chipmaker has seen signs of the Chinese authorities taking similar measures on Samsung.

SK hynix posted 12.2 trillion won in sales in China for the first quarter, down 22.4 percent on year.

“SK hynix has not received any scrutiny or warning from China,” another source in the semiconductor industry said.

Local media outlets said that it is unlikely that the chip duo will make up for the vacuum left by Micron, given that Korea is a close ally of the United States.

The White House reached out to the Korean government to urge Samsung Electronics and SK hynix not to sell chips to China to make up for the shortfall, according to the Financial Times last month.

The Industry Ministry, a government body mainly responsible for devising semiconductor policies, declined to confirm the report.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]