Samsung and SK Hynix are the world's two largest memory chip makers, followed by Micron in third place. All three do significant business in China, although only two South Korean companies have manufacturing facilities there.

On May 21, Beijing announced that Micron failed its security assessment and banned critical infrastructure operators from purchasing the US company's products.

While Micron is the one that Chinese authorities are monitoring, Samsung and SK Hynix are also caught between the two superpowers. Last month, the US asked Seoul to urge chipmakers not to fill the void left by Micron if it is banned.

Despite the political tensions, some analysts see Micron’s disadvantage as a clear business opportunity for Samsung and SK Hynix. Lee Seung Woo, a senior analyst at Eugene Investment and Securities, said the two South Korean chipmakers are in a good position.

In a worst-case scenario, Micron could lose about 11% of its revenue due to the ban, according to Sanford C. Bernstein analyst Mark Li. However, this is unlikely to happen and the loss is likely to be only a few percent.

While Li agrees that China has the ability to approach South Korean companies to supply memory chips, he is not sure if they are willing.

“As domestic suppliers cannot compete in terms of capacity and technology, China will need Samsung, SK Hynix, Kioxia, Western Digital or foreign suppliers to replace Micron. However, all of them are from US allies and rely on US-supplied equipment. We think the possibility of them ignoring US pressure and taking advantage of the Micron ban to gain market share in China is quite low,” said Mr. Li.

China’s Foreign Ministry said on May 22 that it opposed any attempt to block South Korean chipmakers from selling to the country. Beijing said the export ban “seriously violates the principles of market economy, international economics and trade rules, and undermines the stability of global production and supply chains,” spokesman Mao Ning said.

Another factor to consider is the overall memory chip market. Brady Wang, a semiconductor analyst at research firm Counterpoint , predicts that the ban on Micron products in China will have only a limited impact on the global market, including domestic customers, as the overall market continues to struggle with oversupply amid a slowing economy.

According to him, if the ban lasts for a long time – 2, 3 years or more – Korean competitors will benefit. However, at the moment nothing is certain.

In the final quarter of 2022, Samsung and SK Hynix topped the DRAM market with 40.7% and 28.8% market shares, respectively, according to research firm TrendForce . Micron ranked third with 26.4%. DRAM chips are used in everything from TVs to smartphones, but they are commodity products and subject to price fluctuations.

Samsung has a NAND chip plant in Xi'an and a back-end plant in Suzhou, while SK Hynix has a DRAM chip plant in Wuxi and a NAND plant in Dalian. Both companies have received waivers from the US government to continue supplying chip equipment to Chinese facilities.

Responding to Nikkei , Micron said it had received notice of the conclusion of the investigation from the Chinese government. The company will continue to discuss with the authorities.

Beijing launched its investigation into Micron in March after the US signed an agreement with Japan and the Netherlands – two of the world’s major suppliers of chipmaking tools – to limit exports to China. Micron does most of its manufacturing outside the mainland, although it has module and component assembly lines and a test plant in Xi’an. Customers in China and Hong Kong account for 16% of Micron’s 2022 revenue.

The US chipmaker has spoken out about the risks of the US-China tech conflict, including growing competition from Chinese rivals. The company even warned in its report that it could be banned from the world’s largest market.

(According to Nikkei)

China bans products from top US chipmaker China says Micron chips pose 'serious security risks', essentially banning sales of the US semiconductor company's products.