U.S. Influence Over Chinese Chip Manufacturers Explored

Exerting Influence Over Chinese Chipmakers by the United States

The US Department of Commerce has announced a policy change that revokes authorization for Taiwanese and South Korean chip titans to export vital American technology-powered equipment to plants in China. This move is expected to significantly impact the global semiconductor industry, particularly the operations of Samsung, SK Hynix, and TSMC in China.

The change, set to take effect next year, could potentially hobble production, ultimately threatening the survival of these plants. According to reports, Samsung and SK Hynix's China plants contribute to 15% of the global NAND chips and 10% of DRAM chips.

Samsung and TSMC have declined to comment on the current moves, while SK Hynix has stated it will take necessary measures to minimize the impact on its business. The company maintains close communication with both Korean and American governments. TSMC, on the other hand, is said to only make a small number of its less advanced computing chips in China, which may limit the immediate impact on the company.

The US government's decision comes as part of an ongoing effort to tighten tech restrictions, a push that has been more urgent since the Trump administration. Over the past decade, China has worked to build a self-reliant semiconductor supply chain, a nationwide push that has seen the emergence of ChangXin Memory Technologies (CXMT) and Yantze Memory Technologies (YMTC) as top contenders in a market long dominated by Samsung, SK Hynix, and America's Micron.

The US holds commanding positions in chip design and related software, exemplified by Nvidia's dominance in AI chips. In an unprecedented arrangement with Trump last month, Nvidia and AMD agreed to pay the US government 15% of their revenues from chip sales to China in exchange for export licenses. However, President Donald Trump has also rolled back Biden-era limits on global access to AI chips and permitted some Nvidia chip sales to China.

Analysts worry if the licenses will be approved fast enough to avoid disrupting operations abroad. The loss of the authorization is expected to pose only limited impact to TSMC, but the situation remains uncertain for Samsung and SK Hynix, particularly given their significant production in China.

Taiwan's Ministry of Economic Affairs has stated that the US move could pose uncertainty for TSMC's China operations, but it will not affect the nation's chip industry competitiveness. The department intends to grant licenses to allow the firms to continue their operations in China but not to expand capacity or upgrade technology.

The US government is responsible for issuing these licenses through the U.S. Department of Commerce's Bureau of Industry and Security (BIS), which controls the export licenses related to technology and equipment. These licenses are required after the withdrawal of accelerated export privileges by the US government.

As the situation unfolds, these companies and the global semiconductor industry will need to adapt to the new landscape, potentially leading to shifts in production and supply chains. CNN has reached out to the Commerce Department's office responsible for export controls for comment.