The United States prevents SK Hynix from introducing cutting-edge equipment to its companies in China
[Epoch Times December 01, 2021](Interviewed by Hong Kong Epoch Times reporters Wu Huanxin and Li Runjing) Xi Jinping once said at the height of the Sino-US trade war in 2019, “The Pacific Ocean is so big that it can accommodate both China and the United States.” , But in the high-tech era of globalization, the Pacific may be small.
South Korea’s SK Hynix plans to introduce cutting-edge equipment to its enterprises in China. This move was opposed by the United States. Some experts believe that it is very important for Korean companies to choose between the United States and China. Since almost all technological leadership is controlled by American companies, strengthening the supply chain led by the United States is in line with the realistic direction.
According to Reuters, SK Hynix originally planned to introduce the latest extreme ultraviolet (EUV) lithography machine exclusively produced by ASML in the Netherlands to its semiconductor DRAM factory in Wuxi, Jiangsu Province for technical upgrades. However, due to related equipment It may be used by the CCP to increase its military power. The US opposes SK Hynix’s introduction of this equipment to China.
According to the report, if this situation is not resolved in the next few years, SK Hynix may be at a disadvantage in competition with rivals such as Samsung Electronics and Micron, the number one memory chip manufacturer.
SK Hynix is the world‘s second largest memory chip company after Samsung Electronics. The Wuxi plant is the core company that accounts for 50% of SK Hynix’s DRAM production and 15% of the global DRAM production. SK Hynix and China’s Wuxi Xinfa Group jointly invested more than 370 billion won (approximately more than 44 billion US dollars). Construction began at the beginning of the month.
SK Hynix President Seok Hee Lee said that EUV will not be introduced to factories in China immediately, but “there is still enough time.”
However, in order to prevent the CCP from using cutting-edge semiconductor technology to strengthen its military power, the United States has implemented sanctions against China’s semiconductors as early as last year. Former U.S. President Trump (Trump) requested last year that U.S. companies and foreign companies using American technology must obtain prior approval from the U.S. Department of Commerce if they want to export semiconductor production technology, equipment, and parts to China. The US government can block exports at any time. The Trump administration also lobbied the Dutch government in an all-round way to prevent Asmir from selling semiconductor technology to the leading Chinese semiconductor company SMIC.
In response to SK Hynix’s intention to introduce the latest extreme ultraviolet (EUV) lithography machine into its semiconductor factory in Wuxi, Jiangsu Province, Katherine Tai, a representative of the Office of the United States Trade Representative (USTR) who recently visited South Korea, told South Korea’s CBS radio station that the US side The opposition to the introduction of relevant equipment by relevant companies in China “is for reasonable reasons that if cutting-edge equipment is introduced into China, it may bring hidden dangers to national security.”
When asked whether the U.S. will expand measures to restrict the introduction of technology and equipment by Chinese companies to other fields besides semiconductors on the grounds of security, Dai Qi replied, “Although national security is related to military and national defense, it involves The scope may be wider.”
South Korean media generally believe that not only semiconductors, but the United States will also expand measures to restrict the introduction of technology and equipment by Chinese companies to other fields besides semiconductors.
Korean media generally reported that South Korean companies caught in the US-China science and technology war may be affected as a result. Some analysts believe that, just like when the THAAD incident occurred, South Korean companies in completely different fields will also be retaliated by the CCP. Because China is the largest customer buying 40% of South Korean semiconductors, and the roundabout imports through Hong Kong will account for more than 60%.
In this regard, Jinwoo Lee, head of the investment strategy team and research committee of South Korea’s Meritz Securities Investment Strategy Group, said in an interview with Epoch Times recently that, in fact, South Korea has long been included in the US supply chain and is a relatively beneficiary country. The conflict between the US and China itself Local areas may bring some losses to Korean companies’ undertakings in China.
However, he said that the SK Hynix incident is not so much an individual problem as it is a continuation of the polarization of the supply chain between the United States and China. South Korean semiconductor companies such as SK Hynix already enjoy a monopoly in the semiconductor memory field. It is expected that their position or influence in the US supply chain will be very high. The position of South Korean semiconductors is irreplaceable in China. Moreover, “because in today’s semiconductor market In terms of competition, the current status quo was formed through several semiconductor supply competitions and games. Although the incident will have an immediate psychological impact on South Korea, it is difficult to say that it will cause losses in the long run.”
In response to the question of how South Korean companies should respond in the future, he said, “Except for some areas of AI, almost all technology dominance is controlled by American companies. Therefore, strengthening the linkage with the United States and strengthening the supply chain led by the United States is in line with reality. “I think relatively speaking, industries that belong to the US supply chain should have more opportunities than China.”
“And now is the time when which side you stand on becomes important,” he emphasized, “From the standpoint of South Korea, it will choose to favor the United States, and it should also choose the United States.”
In addition, Li Zhenyu analyzed the necessity of South Korean companies choosing the United States from the perspective of South Korea’s high degree of trade dependence on China and the risks that it brings, as well as the renewed increase of the strategic value of the United States to South Korea.
He said, “Although South Korea is the country that exports the most to China, since 2010, exports to China have never increased, and its proportion has stagnated. On the contrary, South Korea’s share in the US supply chain has continued to increase. With the As the market expands, it will become clear who to choose and who to abandon.”
The report released by the Bank of Korea on November 3 shows that South Korea’s total exports to China have basically stagnated since 2010. The reason is that China’s labor costs are rising, multinational companies continue to relocate their global production bases from China to Southeast Asia and India, as well as the protracted Sino-US trade conflict. The Bank of Korea analyzes and predicts that exports to China will hardly promote rapid growth in exports as it did in the past.
However, South Korea’s exports and investment to the United States are in the opposite direction. The Korean National Federation of Economic Workers stated on November 24 that from 2017 to this year, South Korea’s cumulative exports to the U.S. increased by 17.9% over the previous five years (2012 to 2016). In particular, this year’s South Korean exports to the U.S. increased by 31.0% year-on-year. It accounts for 15.0% of South Korea’s total exports. This is the highest value since it accounted for 16.9% in 2004.
Statistics from the All Economic Federation also show that since 2017, South Korea’s investment in the United States has surpassed its investment in China and has consistently ranked first. Especially last year, South Korea’s investment in the United States reached US$118 billion, while its investment in China was US$94.2 billion, which was less than its investment in Southeast Asia (US$108.7 billion), ranking third. As Samsung, Hyundai Motor, SK, and LG build large-scale factories in the United States for semiconductors, automobiles, and batteries, direct investment in the United States is expected to continue to increase.
In addition, Li Zhenyu also said that SK Hynix’s plan to upgrade its Chinese factories was blocked by the United States, which may cause SK Hynix and the domestic semiconductor industry to avoid the spread of Chinese investment. Because “the process of de-sinicization has already begun, in areas with high technological sensitivity or because China cannot provide the same low labor costs as before, the trend of preference for China has passed.”
“The direction is that it is possible to build factories in China’s domestic demand market for sales purposes, but as a production base or intermediate base, China will become less attractive. In other words, the scale of investment itself may be less flexible than in the past.” He said.
Editor in charge: Lian Shuhua#
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