SK Hynix Inc. warned that the Biden administration’s escalating restrictions could force the closure or sale of a major plant in China, an “extreme situation” it hopes to avert.
(Bloomberg) — SK Hynix Inc. warned that the Biden administration’s escalating restrictions could force the closure or sale of a major plant in China, an “extreme situation” it hopes to avert.
Hynix told analysts the memory chip giant was preparing for various contingencies, including the possibility that Washington’s curbs could prevent it from getting the gear it needs to sustain its DRAM factory in Wuxi. Hynix would then be forced to sell or move the production equipment to South Korea, Chief Marketing Officer Kevin Noh said.
The US Commerce Department this month unveiled sweeping regulations that limit the sale of semiconductors and chipmaking equipment to Chinese customers, striking at the foundation of the country’s efforts to build its own chip industry.
The curbs have also cast uncertainty over major Chinese operations run by foreign firms including Hynix and larger rival Samsung Electronics Co. Both firms have obtained a one-year waiver that lets them import the equipment they need to maintain or potentially expand their factories. Hynix, which on Wednesday warned it will cut capital spending by half in 2023 to reflect waning electronics demand, is hopeful it can continue to operate in China.
“If the time comes when it appears difficult to maintain operation of the fab in Wuxi, then we might have to sell off the fab or move the equipment to Korea,” Noh said. “We are looking into various scenarios, but again, this would amount to a contingency. So this would be an extreme situation.”
Read more: SK Hynix Cuts Capex in Half With ‘Unprecedented’ Drop in Demand
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