Asian businesses are being dragged into the chip war
UNLIKE LOGIC chips, which process information, memory chips, which store it, looked less vulnerable to the Sino-American techno-tussle. Such semiconductors are commodities, less high-tech than microprocessors and so less central to the great-power struggle for technological supremacy. That changed on May 21st, when the Chinese government banned memory chips made by Micron from critical-infrastructure projects. The restriction hurts the American chipmaker, which last year derived 11% of its revenue from mainland China. It also opens up a new front in the transpacific chip war—one which the countries that are near China but allies of America are being roped into.
By opening a gap in the market, the ban creates an opportunity for the world’s two biggest memory-chip makers, Samsung Electronics and SK Hynix, both from South Korea. They made 16% and 44% of their respective sales in China in 2021. With Micron frozen out of critical infrastructure—and looking riskier to other Chinese buyers—the South Korean duo can pick up more contracts. That is what investors seem to have concluded: Samsung’s share price is at its highest since April 2022; SK Hynix’s was last this lofty in August.
The prospect of a windfall for South Korea’s chipmakers is, however, complicated by the country’s blend of American and Chinese interests. President Joe Biden’s administration has made no official demand asking its counterpart in Seoul to prevent the South Korean firms from jumping in to fill orders for which Micron will no longer be able to compete. But it is said to be lobbying for this behind closed doors. The 28,500 American troops stationed in South Korea to protect it against its despotic nuclear-armed neighbour to the north lend weight to such requests.
2023-05-25 07:59:02
Source from www.economist.com