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Samsung May Pull Out Of China

Samsung Electronics and SK Hynix are among the South Korean chipmakers who are likely to abandon their Chinese operations, as new limitations imposed in the US CHIPs act come into effect.

The Chips and Science Act passed by Congress last week, will pour A$75 billion into chip manufacturing companies operating in the US. One of the stipulations for receiving these funds is that recipients cannot expand or upgrade their Chinese chip operations for 10 years.

This will lead Samsung and SK Hynix to pivot chip manufacturing to the US.

“The guardrails against China will accelerate Korean chipmakers’ shift to the US from China,” said Kim Young-woo, head of research at SK Securities.

“They have been rethinking their strategies because of the US-China technology war, and they are now tilting further towards the US because of geopolitical risks.”

Kim said Samsung and SK Hynix “will build more US plants because they cannot mass-produce cutting-edge chips without US equipment and technology.

“If they have to make a choice between the US and China, they have no choice but to opt for the US”.

Samsung is the world’s largest memory chip maker. It has announced it will build a A$24.5 billion plant in Texas, a move that prompted Joe Biden to visit the company’s Pyeongtaek factory in May.

SK Hynix said in a statement: “As the legislation was recently passed in the House and some details remain publicly undisclosed, we are closely monitoring the situation.”

 



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