The US may impose regulations on some Chinese DRAM makers

The US is set to broaden its regulations to include Chinese-made general-purpose semiconductors. It is a move that could prove advantageous for South Korean memory semiconductor giants like Samsung Electronics and SK hynix. The focus of the regulations is on NAND flash and DRAM, where the technological gap with China is less significant.

The Bureau of Industry and Security (BIS) under the US Department of Commerce is planning to survey more than 100 companies across sectors. It includes automotive industries, aerospace, and defense and will start in January next year. The goal is to assess the dependence of US companies on Chinese-made general-purpose semiconductors.

Following the survey, the Department of Commerce is likely to consider imposing tariffs on these Chinese semiconductors, with potential measures to ban US defense companies from importing them. Significant in context, Apple has already canceled its deals with YMTC amid the US ban.

The US regulations are particularly aimed at companies like YMTC for NAND, CXMT for DRAM, and SMIC as a foundry

The regulations from the US Commerce Department may cast a shadow over China’s DRAM and NAND export front. US companies may reduce their reliance on Chinese semiconductors to mitigate the uncertainty of additional regulations. The regulations are aimed particularly at companies like YMTC for NAND, CXMT for DRAM, and SMIC as a foundry.

The anticipated outcome is a shift in US procurement towards South Korean products as an alternative to Chinese ones. Samsung Electronics and SK hynix, with semiconductor factories in China, may be designated as exceptions to export controls. Because it will be necessary to maintain the semiconductor supply chain.

This development is also seen as a positive turn of events for NAND businesses in the US, which have struggled amid the continuing downturn in IT demand. The NAND market, encompassing solid-state drives and other data storage devices, is fiercely competitive. There is very little technological disparity between companies leading to an oversupply.

With the potential reduction in supply from Chinese competitors due to regulatory challenges, Samsung Electronics and SK hynix are expected to increase their supply, deplete their inventory more rapidly, and witness a turnaround in their NAND business from the second half of the next year.