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Is China feeling pressure from its own ban against Micron?

Chinese propaganda media urges Korean chipmakers to fill up gap of US chipmaker

By Jo He-rim

Published : May 30, 2023 - 15:49

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A sign marks the entrance of the Micron Technology automotive chip manufacturing plant on Feb. 11, 2022, in Manassas, Virginia, US. (AP-Yonhap) A sign marks the entrance of the Micron Technology automotive chip manufacturing plant on Feb. 11, 2022, in Manassas, Virginia, US. (AP-Yonhap)

China appears to be feeling pressure of potential chip shortfall after banning US-based chipmaker Micron Technology from selling certain products to its market, and is calling for South Korean chipmakers to fill up the gap to meet its local chip demand, according to experts on Tuesday.

Global Times, China’s state-run English media, said in an opinion piece on Monday it will be “natural” for South Korea’s chip companies to fill some market gap in China, if China and South Korea are “to step up their semiconductor cooperation.”

It also said that the market gap “may not necessarily be exactly that lost by Micron.”

The publication came amid reports that the United States has urged Korean chipmakers against taking Micron's place in the Chinese market. Bloomberg also reported Sunday that the South Korean companies will "avoid capitalizing" on China's ban on Micron for its relationship with the US, citing an unnamed source familiar with the situation.

Beijing’s cyberspace regulator has blocked its key infrastructure firms from buying certain products made by Micron, as it announced the US’ biggest memory chip maker failed its network security probe on May 21.

“In fact, it is hard to identify specifically which market share Micron has lost as market demand changes. So the US demand that the South Korean government ban South Korean chipmakers from filling the gap left by Micron in the Chinese market is actually aimed at curbing the chances for South Korean chipmakers to further expand their businesses in China,” Global Times said.

“Such attempt is a clear interference in mutually beneficial and legitimate commercial cooperation among other countries and a violation of the international trade rules.”

While China has not been so "outspoken" over its chip shortage, the latest publication appears to show that the Micron ban has come unilaterally from the government and the market faces the challenge of a potential shortfall, an industry official here told The Korea Herald under the condition of anonymity.

“The rare message appears to show that China is desperate. While YMTC may be able to supply some demand for NAND flash, there is no Chinese company producing Dram. Korea's Samsung Electronics and SK hynix are the major suppliers for the country," the official said. Yangtze Memory Technologies is a Chinese semiconductor firm specializing in NAND chips.

"And China has a lot of appliance manufacturers in need of those chips."

The Chinese media outlet also pressed on to say that China is Korea's top semiconductor buyer, purchasing some 40 percent of the country's overall chip exports.

"There is no possibility for South Korea to replace its chips with other goods in its exports to China, or shift its chip market to the US or any other country in the short term," GT said.

Samsung Electronics and SK hynix, the world's top memory chipmakers did not comment about their production plan in China amid the escalating technological war of the US and China.

On Sunday, US Commerce Secretary Gina Raimondo said the US “won’t tolerate” China’s ban on Micron.

Raimondo said Beijing’s action "target a single US company without any basis in fact,” and that “we see it as plain and simple economic coercion and we won't tolerate it, nor do we think it will be successful."

Last year, Samsung Electronics' sales in China recorded 54.7 trillion won ($41.3 billion), and SK hynix logged 12.2 trillion won. Micron Technology was third in the list by revenue with $3.3 billion.