Shares of South Korean tech giants Samsung Electronics and SK Hynix plummeted on Monday after the United States government rescinded licenses permitting them to utilize American semiconductor manufacturing equipment in their Chinese facilities. This decision, effective in 120 days, is expected to significantly disrupt the operations of both companies, which rely heavily on their Chinese plants for the production of DRAM and NAND flash memory.
Analysts estimate that over one-third of Samsung’s DRAM output originates from its Chinese plants. In contrast, SK Hynix’s reliance on its Chinese operations is estimated to be between 30% and 40% for both DRAM and NAND production. The immediate market reaction was severe, with Samsung shares falling by 2.3% and SK Hynix shares dropping by a more substantial 4.4%, significantly outpacing the 0.7% decline in the benchmark KOSPI index.
Before this revocation, both companies had benefited from exemptions to broader US restrictions on chip-related exports to China. SK Hynix responded to the news by stating its commitment to maintaining open communication with both the South Korean and US governments, as well as its intention to implement strategies to minimize the negative consequences for its business. Samsung, however, declined to comment publicly on the matter.
Despite the initial market turmoil, some analysts remain cautiously optimistic about the long-term implications. Ryu Young-ho, a senior analyst at NH Investment & Securities, suggested that the short-term impact might be limited, citing the companies’ strategic focus on expanding production capacity in South Korea. However, the broader impact on the South Korean semiconductor sector is evident, with shares of other related companies, including Hana Micron and Hanmi Semiconductor, also experiencing noticeable declines, reflecting a wider market concern.
