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Chinese Firms Stockpile Samsung's High-End Chips Amid Looming US Export Restrictions

Chinese tech companies, including Huawei and Baidu, are stockpiling Samsung's high bandwidth memory (HBM) chips as they brace for new US export controls.

In response to potential new U.S. export controls, major Chinese tech companies like Huawei and Baidu, along with various startups, are accumulating Samsung's high bandwidth memory (HBM) chips. These semiconductors, essential for advanced artificial intelligence (AI) applications, have seen increased demand as Chinese firms prepare for restrictions that could hinder their access to critical technology. Sources reveal that China's purchase of these chips constituted approximately 30% of Samsung's HBM revenue in the first half of 2024, underscoring the country's strategic focus on maintaining its technological ambitions amidst escalating trade tensions with Western nations.


Image of Samsung high bandwidth memory (HBM) chips, which are being stockpiled by Chinese firms ahead of US export restrictions.
Chinese tech giants are rushing to stockpile Samsung's HBM chips ahead of anticipated US export restrictions, signaling rising trade tensions.

Anticipated US Export Restrictions

Reports indicate that the U.S. government plans to introduce a new export control package that could include stringent restrictions on high bandwidth memory chips. This move is seen as part of a broader effort to curb China's access to cutting-edge technologies, potentially impacting key sectors including AI development. The U.S. Department of Commerce has been actively reassessing export controls to protect national security, although the specific details of the proposed restrictions remain unclear.



China's Strategic Stockpiling

As China faces an evolving threat environment and potential technological bottlenecks, its companies are accelerating the acquisition of HBM chips, particularly the HBM2E model. This model, although two generations behind the latest HBM3E, is still critical for various advanced applications. With domestic production capabilities still maturing, China's reliance on foreign suppliers like Samsung has intensified. This situation is exacerbated by the global demand for AI-capable semiconductors, which has led to supply constraints for more advanced models.


Impact on Global Semiconductor Supply Chain

The looming U.S. restrictions are expected to have a significant impact on the global semiconductor supply chain, particularly for companies like Samsung and SK Hynix, which are major suppliers of HBM chips. While Micron Technology, another key player, has already ceased selling HBM products to China, Samsung's substantial market share in China could leave it particularly vulnerable to the effects of the new regulations. SK Hynix, which primarily serves clients like Nvidia, has been ramping up production of the more advanced HBM3E chips, indicating a strategic pivot in response to market demands.


Chinese Domestic Efforts and Challenges

Chinese firms have been attempting to develop their own HBM capabilities, with companies like Huawei and CXMT focusing on producing HBM2 chips. However, these efforts are still nascent and face significant challenges, especially in keeping pace with global technological advancements. The anticipated U.S. export restrictions could further hamper these efforts, potentially delaying China's progress in achieving self-sufficiency in semiconductor technologies.


The unfolding scenario highlights the broader geopolitical struggle over technological supremacy and the critical role semiconductors play in both economic and national security. As the situation develops, the global tech industry will closely watch how these dynamics influence market access, supply chains, and the balance of power in emerging technologies.


Source: Reuters

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