US chip export curbs on China leave Samsung unscathed, for now

The latest US export controls banning shipments of high-bandwidth memory chips to China are expected to have a limited impact on Korean chipmakers, mainly Samsung Electronics.

But the restrictions could result in lost opportunities to acquire new customers, experts said Tuesday.

The US Bureau of Industry and Security announced Monday a new set of measures banning the export of critical chips and chip equipment, including HBM, advanced chip packages of stacked DRAM chips. The cutting-edge chips are critical components used in artificial intelligence applications, for AI training and inference at scale.

The US government enforces its export controls based on the Foreign Direct Product Rule or FDPR, which gives it the power to prohibit the sale of products made using American technology. The FDPR has been a critical tool in US efforts to hinder China's technological progress, given that all chipmakers use American technology and tools.

Under the new regulation, the BIS has banned the export of HBM with a memory bandwidth density greater than 2 gigabytes per second per square millimeter -- affecting all HBM stacks currently in production.

HBMs already integrated into logic chip products are exempt from the regulation. Additionally, chipmakers headquartered in the US or allied countries can export their chips to their affiliates in China.

SK hynix, Samsung Electronics and US-based Micron Technology -- the only three chipmakers that make the cutting-edge HBM chips -- will be prohibited from selling HBMs to China starting Dec. 31, when the new controls take effect.

Overall, the impact of the new US regulation is expected to be limited, considering that most of the up-to-date, high-value HBMs are sold to the US. But Samsung is likely to be affected the most, reportedly generating about 20 percent of its HBM chip sales from China, industry officials said.

SK hynix, which dominates the HBM market with a share of approximately 52 percent, supplies most of its products to TSMC in Taiwan, the foundry that delivers cutting-edge chips to US clients, including Nvidia.

Samsung, with a share of about 42 percent in the HBM market, has reportedly been selling older HBM2 and HBM2E chips to China, as the country seeks to stockpile the advanced chips ahead of potentially additional US sanctions.

"SK hynix supplies most of its HBM products to Nvidia in the US. Samsung Electronics exports some lower-spec HBMs to China, but it's understood to be a small amount. So we believe the impact (of the US regulation) on Korean companies will be limited," a Trade Ministry official said.

The ministry said it will establish a new consultation desk on export controls to provide consultations to companies regarding US trade rules.

The latest measure, however, puts pressure on Samsung to secure deals with big tech giants to compensate for the lost orders from China, experts said.

"Samsung should work to reduce uncertainties and hurry to secure deals with major US tech firms to supply its HBM3E and HBM4 chips," Ahn Ki-hyun, an official at the Korea Semiconductor Industry Association said.

SK hynix stands as the main supplier of the latest fifth-generation HBM3E chips to Nvidia, the top GPU maker purchasing the majority of the most advanced DRAM chips. Samsung, which lost its earlier edge over its rival, has hinted it will supply to Nvidia soon. Currently, the tech giant is delivering its HBM3E chips to AMD, among others.

Both Samsung and SK hynix are expected to launch the next-generation HBM4 next year.

There are also concerns that the new export controls could hinder companies from expanding their customer base.

“For now, the regulation is largely considered to have a limited impact. But given the potential of HBM products and the current market trends, the industry is missing out on potential customers,” an industry official said.

About 30 percent of the total sales of Samsung Electronics and SK hynix, separately, are estimated to come from China.