SEOUL, Sept. 15 (Korea Bizwire) — South Korean chip exports to China are feared to take a hit from U.S. sanctions on Chinese telecom giant Huawei Technologies Co. due to their heavy dependence on the neighboring country, sources said Tuesday.
The new sanctions, which ban the supply of semiconductors made with U.S. equipment, software and design to Huawei without prior approval from Washington, became effective the same day.
The U.S. move forces Samsung Electronics, the world’s top memory chip maker, and SK hynix Inc. to stop semiconductor shipments to the Chinese company.
Huawei is known as one of Samsung’s top five customers. SK hynix reportedly depends on Huawei for some 10 percent of its sales.
Industry sources said the sanctions on Huawei will likely hit South Korea’s semiconductor exports to China, given their huge dependence on the world’s second-largest economy.
According to data from the Korea International Trade Association (KITA), China accounted for about 41 percent of South Korea’s chip exports in the first seven months of this year.
The value of South Korea’s chip exports stood at US$54.74 billion in the seven-month period, of which $22.49 billion came from China. Hong Kong came in second with 20.8 percent, or $11.38 billion.
During the same period, South Korean exports of flat panel displays and sensors reached $3.82 billion, or 43.7 percent of total shipments of those products. Vietnam ranked first with 44.5 percent.
Industry watchers said South Korean chipmakers may suffer 10 trillion won ($8.45 billion) in lost exports should the U.S. sanctions remain in place for one year.
The estimated loss amounts to about one-tenth of South Korea’s overall chip exports in 2019, which came to $93.93 billion.
The U.S. sanctions come as Washington has increasingly sought to ban the use of Chinese technology, citing national security concerns.