In recent years, the U.S., Japan, and the Netherlands have progressively tightened restrictions on China’s access to semiconductor technology. In contrast, South Korea has responded more cautiously to U.S. demands, owing to its heavy reliance on the Chinese market. This is all in the midst of growing U.S.-China tensions.
However, according to a report by The Korea Herald, the U.S. has increased its pressure on South Korea to comply with its export controls on China.
During the Korea-U.S. Economic Security Conference 2024, held in Washington, D.C. on 10th September, U.S. Commerce Department Undersecretary Alan Estevez urged South Korea’s top HBM producers, Samsung and SK hynix, to adhere to U.S. restrictions on exports to China. He recommended that their production capacity be directed towards supplying advanced chips to allied nations rather than competitors like China.
Estevez acknowledged South Korea’s history of cooperation with the U.S., but highlighted the dual-use nature of AI technology, which can be employed for military purposes. He stressed the need to prevent China from acquiring advanced chips that could be used to develop AI models.
South Korea’s Trade Minister, Cheong In-kyo, responded by stating that while discussions with the U.S. would continue, these export controls had considerable implications for South Korean businesses and the national economy.
Industry sources cited by The Korea Herald suggested that the direct export of chips from Samsung and SK hynix to China may be relatively small, possibly limiting the overall impact of such controls. However, a Reuters report indicated that approximately 30% of Samsung’s HBM chip sales in the first half of the year were made to China.
The Korea Institute for Industrial Economics and Trade explained that South Korea’s economic dependency on exports to China meant it could not fully align with U.S. export restrictions, unlike Japan and the Netherlands.
Further statistics, reported by Chosun Daily using data from South Korea’s Ministry of Trade, Industry, and Energy as well as the Korea International Trade Association, revealed that South Korea’s exports to China had risen by 14.9% year-on-year in July 2023, reaching $11.4 billion. This was the highest level since October 2022. Notably, memory exports surged by 89% year-on-year, totalling $6.8 billion.
Semiconductor exports experienced robust growth, with chip exports increasing 49% year-on-year. In June, South Korea’s memory exports reached $8.8 billion, accounting for 65.8% of total semiconductor exports—the highest share in two years since December 2021.
These figures underscore South Korea’s strong position in the semiconductor sector and the continued demand for its products in China, especially in the ICT and chip markets.
Meanwhile, as a result of U.S. restrictions on advanced chip manufacturing technologies, China has been pursuing independent advancements in the HBM sector.
Currently, the HBM market is dominated by South Korean companies SK hynix and Samsung Electronics, along with the U.S. firm Micron, all of which are producing the latest HBM3 chips.
Nevertheless, according to Tom’s Hardware, Chinese companies such as CXMT are making progress in developing HBM technology and are beginning early-stage production. Additionally, Huawei, in collaboration with other Chinese firms, is aiming to produce HBM2 chips by 2026.
