Semiconductor companies in South Korea and Japan are walking a tightrope, which is not only a game of technology and market, but also a political entanglement. The U.S. crackdown on China's semiconductor industry has forced companies in these countries to comply, but how long can this situation last?
The U.S. crackdown on China's semiconductor industry is not an overnight decision, but the accumulation of years of policies. The aim is to halt China's rise in the tech sector, especially in semiconductors, the heart of modern technology. The U.S. restrictive policy clearly states that South Korea, Japan and other companies cannot sell semiconductor equipment with 14nm and below processes to China. However, in the process of implementation, Japan has extended the restriction to the 40nm process, for fear that one will accidentally touch the bottom line of the United States.
Faced with this situation, South Korean semiconductor giants such as Samsung and SK hynix have also had to strictly abide by it. Not only that, but they also went one step further, and did not even dare to sell second-hand equipment and mature equipment to China. This "overreach" has led to a serious inventory overstocking problem. Warehouses are full of idle equipment, and they pay high storage fees year after year, with Samsung and SK hynix alone costing more than 20 billion won (about 104.6 million yuan) a year in storage costs. This is really "losing the wife and the soldiers", which not only loses the market opportunity, but also increases the cost burden.
In stark contrast, other semiconductor companies such as Kioxia, Intel, Micron, etc., are not so honest. They are still selling old equipment to China, whether it is equipment for front-end or back-end processes. These companies are apparently much more flexible in policy implementation, not fully complying with US directives, and still reaping the benefits of the Chinese market.
After a long time, Samsung and SK hynix realized that it would not work like this. After all, the equipment piled up in the warehouse not only takes up space, but also eats money. So, they decided not to fully follow the instructions of the United States and planned to sell these old equipment, especially those from the United States and Europe. The decision was undoubtedly a gamble, but it was also a business choice of last resort.
However, they also do not dare to sell equipment for advanced processes, only those used for mature processes. After all, mature process equipment is not within the scope of the United States, and the market demand for this part of the equipment is still strong, especially in Chinese mainland. Chinese fabs are interested in these older equipment, because many domestic manufacturers need mature process equipment that is cost-effective.
Data shows that Chinese mainland has become the world's largest semiconductor equipment market for four consecutive quarters. Sales in the first quarter reached $12.52 billion, up 113% from the same period last year. This huge market is undoubtedly a great opportunity for Samsung and SK hynix. If they don't seize this opportunity now, when China buys enough equipment, I am afraid that they will really not be able to find a suitable buyer.
For Samsung and SK hynix, this is not just a business decision, but a life-and-death decision. If we continue to be patient according to the instructions of the United States, the equipment in the warehouse will only accumulate and the financial burden on the company will become heavier. And choosing to sell these equipment, although it takes a certain political risk, can at least stop the loss in time in exchange for much-needed cash flow.
At the same time, other companies in the market, such as Kioxia, Intel and Micron, are making a lot of money by selling various devices to China. This made Samsung and SK hynix even more determined in their decision-making. This time, they no longer want to be "honest people" and decided to navigate the gray area of the rules in search of maximum commercial gain.
In short, Samsung and SK hynix have made important strategic adjustments in this complex and volatile market environment. They decided not to fully follow the instructions of the United States and chose to sell their old equipment for cash. This decision is not only a manifestation of business wisdom, but also an act of self-help under international political pressure.
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