On June 24, the South China Morning Post quoted Simon Woo, managing director and coordinator of Asia-Pacific Technology Research at BofA Securities, as saying, “China will rely more on Korean memory chips as its AI ecosystem grows.” Woo added, “China’s [semiconductor] supply chain is still insufficient for high-end memory fabrication, with its growth mainly focused on mid- to low-end solutions.”
Due to U.S. export restrictions on advanced semiconductor equipment, China’s semiconductor industry has focused on legacy semiconductors used in automotive and electronic products instead of quickly catching up with cutting-edge semiconductor technology. Legacy semiconductors typically refer to products manufactured with processes of 28 nanometers (nm) or larger. This focus has allowed Chinese companies to dominate the sector. Market research firm TrendForce predicts that, bolstered by supportive government policies, Chinese companies will see their share of the global legacy semiconductor market grow from 29% last year to 33% by 2027.
With the emergence of the AI era, companies such as Wuhan Xinxin Semiconductor Manufacturing (XMC), Huawei, and ChangXin Memory Technologies (CXMT) are now eyeing HBM development. Notably, Huawei aims to produce second-generation HBM (HBM2) next year. However, they face a significant technological gap, as Samsung Electronics and SK Hynix began mass-producing HBM2 in 2016.
Additionally, the U.S. government is reportedly considering regulations on HBM, making it more challenging for China to develop next-generation HBM independently. According to Bloomberg and other foreign media, the U.S. Department of Commerce plans to request that semiconductor equipment companies, such as ASML from the Netherlands and Tokyo Electron (TEL) from Japan, halt maintenance and repair services for equipment in China to restrict China’s HBM development and production.
Woo noted that mainland China currently accounts for about 30% to 35% of global memory consumption. These numbers are likely to grow. Market research firm IDC projects that China’s investment in the generative AI sector will grow from $600 million in 2022 to $13 billion by 2027, with an average annual growth rate of 86.2%. Given that SK Hynix and Samsung Electronics dominate the HBM market, it is highly likely that these South Korean companies will be the primary suppliers of HBM needed by China.
By Chun Byung-soo,
