News Tech: Last December, the Chinese personal equity firm Wise Road Capital and the South Korean semiconductor company Magnachip announced that their proposed $1.4 billion merger had failed.
That didn’t stop the Committee on Foreign Investment in the United States, a body established in the 1970s to monitor OPEC countries’ purchases of US strategic assets, from interfering in the merger, though.
Magnachip doesn’t have any significant operations in the US in terms of production, research and development, or sales except from its listing on the New York Stock Exchange and a flimsy corporate presence in Delaware.
Cfius interfered in the merger and asserted that it would pose a threat to US national security, cancelling the agreement and sending a shudder through the semiconductor industry in a move that caught the industry off guard.
The Financial Times reported this month that Korean semiconductor titans shoppingmode Samsung Electronics and SK Hynix are re-evaluating their investments in China in response to “guardrails” within the laws that prohibit recipients of US federal funding from increasing or upgrading their superior chip capability in China for 10 years.
Competitors together with Taiwan’s TSMC and US chipmakers Intel and Micron, all of which have manufacturing operations in China, are additionally beneath strain to spice up home US manufacturing whereas making it more durable for Beijing to acquire superior semiconductor expertise. The strain is more likely to construct because the US makes an attempt to rally allies Korea, Taiwan and Japan behind a “Fab 4 chip alliance” designed to co-ordinate coverage on analysis and growth, subsidies and provide chains.
Korean chipmakers, traditionally reluctant to take sides within the technological rivalry between the US and China, have acted as a bellwether for the path of the worldwide semiconductor business. Samsung and SK Hynix have boosted investments in US manufacturing services at the same time as they continue to be closely uncovered to the Chinese market. South Korea exported $50bn of chips to China final 12 months, up 26 per cent from 2020 and accounting for almost 40 per cent of the nation’s complete chip exports, in accordance with the Korea International Trade Association.
But they share a near-total dependence on a small variety of US, Japanese and European chip designers and tools makers for the expertise required to supply superior chips, giving Washington leverage over what Miller described because the “main choke points in the semiconductor production process”. Those firms embrace US chip designers Cadence and Synopsis, Siemens-owned Mentor Graphics, American tools makers Applied Materials and Lam Research and ASML within the Netherlands, which makes the acute ultraviolet lithography instruments wanted to supply cutting-edge Dram reminiscence chips.
China’s largest chipmaker Semiconductor Manufacturing International Corp introduced final month that it had began transport superior 7-nanometre semiconductors. However, analysts mentioned that with out entry to the world’s most subtle tools, SMIC would battle to shut the hole with shoppingmode Samsung and TSMC, that are main world suppliers of 5nm and 4nm chips. An individual near TSMC, which dominates the worldwide marketplace for foundry chips, mentioned the US invoice was unlikely to have a dramatic impact because the Taiwanese authorities already had restrictions on producing superior chips in mainland China.
Neither shoppingmode Samsung nor SK Hynix, which each specialize in reminiscence chip manufacturing, manufacture their most superior semiconductors in China. “China has the market, but the US has the technology,” mentioned Yeo Han-koo, who served as South Korea’s commerce minister till May. “Without technology, you have no product. Without a market, at least you can find a way to diversify and identify alternatives.”