Shares in South Korean semiconductor giants Samsung Electronics and SK Hynix declined on Monday after the U.S. government revoked key export authorizations, blocking their access to advanced American chipmaking equipment for factories in China. The move complicates efforts to upgrade or expand their Chinese production facilities, potentially undermining their competitive edge in critical memory chip manufacturing.

The Biden administration’s decision reflects escalating efforts to restrict China’s technological advancement and align global semiconductor supply chains with U.S. national security interests.

Both companies had previously received temporary waivers from broader China export controls, but these exemptions have now been narrowed or withdrawn, signaling tougher enforcement ahead.

Samsung and SK Hynix operate major NAND and DRAM memory chip plants in China, which contribute significantly to global supply chains for smartphones, servers, and consumer electronics.

Constraints on equipment upgrades could gradually reduce their efficiency and technological parity with facilities in South Korea and the U.S., especially as chip technology advances toward smaller nodes.

The restrictions may accelerate both firms’ plans to shift production out of China. Samsung has already invested heavily in new fabs in Texas and South Korea, while SK Hynix is expanding its presence in the U.S. and exploring sites in other allied nations. However, transitioning capacity away from China will be costly and time-consuming.

Market analysts warn that prolonged constraints could benefit competitors—particularly U.S.-based Micron Technology and Japanese chipmakers—while forcing Chinese manufacturers to rely more heavily on domestically developed equipment, which remains years behind cutting-edge international standards.

The move also raises diplomatic tensions with South Korea, which has sought to balance its economic ties with China and its security alliance with the U.S.

Source: Reuters.