China’s maneuver to block sales of Micron products in its infrastructure products will open up an opportunity for the firm’s primary regional competitors in the memory chip market, South Korea’s Samsung and SK Hynix, to quickly consume a significant portion of its market share. However, the US has asked its allies to avoid filling any gaps left by Micron.
Even if the South Korean firms or other foreign chipmakers were to capitalize on this opening in China’s memory chip market, they could soon find themselves in tighter competition with domestic manufacturers, who have been boosted by billions of Dollars in government subsidies throughout the last year.
Related ETF & Stocks: Invesco China Technology ETF (CQQQ), Samsung Electronics Co., Ltd. (005930.KS), SK hynix Inc. (000660.KS), Micron Technology, Inc. (MU), Semiconductor Manufacturing International Corporation (0981.HK)
US chip maker Micron says a ban on selling to Chinese companies working on key infrastructure projects could cost it as much as a “high single digit” percentage of its annual revenue, a large portion of the 11% of annual revenue that previously came from China. The ban was enacted after the Cyberspace Administration of China (CAC) said Micron had failed its network security review, without disclosing risks it had found.
As MRP has previously highlighted, Micron is not the first US-based chipmaker to be caught in the crossfire. China accounted for about $212 billion of the $582 billion in chips sold globally in 2021, according to IDC. Per TechCrunch, Nvidia has said the regulations on shipping its A100 and H100 chips could cause it to lose as much as $400 million of revenue this quarter. TSMC, the world’s largest contract chip maker, also stands to lose from the export control as it does a lot of manufacturing for Nvidia; in particular, the H100. South China Morning Post notes that China accounts for about a quarter of total sales at Nvidia, in gross terms.
Samsung Electronics and SK Hynix are the two biggest makers of memory chips in the world, followed by Micron at number 3. All three companies have significant business in China, but with…
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