The United States is considering imposing export restrictions on shipments of American chipmaking equipment to Chinese memory chip producers; a move that experts believe may further disrupt the already-fragile global chip supply chain.
Should the decision to curb China’s semiconductor manufacturing activities be approved, major chipmakers such as South Korea’s Samsung Electronics and SK Hynix will no longer be able to ship technology tools to their factories based in China, thereby preventing the companies from performing important upgrades that are needed for serving customers.
Lee Min-hee, the analyst at BNK Securities, believes that U.S. restrictions could drive prices upwards as supply gets dried up. “Samsung’s China production alone accounts for more than 15% of global NAND flash production … If there’s any production disruption, it will make chip prices surge.”
Together, Samsung Electronics and SK Hynix control more than half of the world’s NAND flash memory chip market. Their China-based factories produce vital components for products of Apple, Amazon, Meta, and Google.
So far, the global chip shortage has caused production disruptions across the automotive and consumer electronics industries. While shrinking consumer demand and several adjustments have helped to ease the effects of this shortage, it is still not fully resolved.