What’s going on?
The US just played its latest move in the US-China chipmaking tech-off.
What does this mean?
The US has been doing everything it can to stay ahead in the tech race, including placing tough export controls on China to stop the country from getting its hands on the market’s most advanced chips. Well, the world’s second-biggest economy retaliated earlier this month, announcing a national security review into US chipmaker – and one of three memory chip market leaders – Micron. But since Chinese sales make up about a quarter of the chipmaker’s sales, banning the firm could cause it a major headache. The US jumped at that chance to go tit-for-tat, asking South Korea to tell its chipmakers not to plug the supply gap if China ends up banning Micron. That’s certainly the right place to ask: South Korea’s home to the other two market titans, Samsung Electronics and SK Hynix.
Why should I care?
Zooming in: It’s all in the timing.
That’s a tough ask for South Korea: its chipmakers’ jaws would drop at the mere thought of fulfilling a Chinese supply gap, especially now that the industry’s facing a massive glut and falling prices. Thing is, the US has timing on its side. South Korea’s president is taking a trip to Washington this week, and it’ll be hard to forget that the country’s exemption from tight US chip export controls will be up for renewal – or not – later this year.
The bigger picture: Lucky for some.
Now, some analysts doubt that China will replicate its push against US-based Micron in the more specialized sectors of the chip market, since the country’s currently too reliant on western tech. But either way, you can bet China will be ramping up its domestic tech development in a bid to become more self-sufficient. That would light a fire under Chinese chipmakers, which explains why news of the Micron probe sent other chipmaking stocks to the heavens earlier this month.
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Originally Posted April 24, 2023 – Chip Wars
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On a related subject, China is dramatically increasing its business presence in Mexico, so as to not miss out due to U.S. vs. China trade war, and to benefit from USMCA at the same time.