Samsung and SK halt sales of used chipmaking gear to brokers

Just a week after it emerged that Dutch chip equipment manufacturer ASML was under US pressure to stop servicing and reparing its tech sold to customers in China, Samsung and SK hynix are feeling the squeeze too.

The Financial Times has reported that the Korean memory companies have stopped selling on their used chipmaking equipment for fear of it falling into the hands of China or Russia, which might result in them being hit with US sanctions.

So great is this fear that the two started storing their old machines back in 2022, soon after Washington first imposed export controls aimed at China, the FT claims. Samsung and SK hynix would otherwise pass used equipment to dealers who put them up for sale at auctions, with buyers typically being Chinese companies that refurbish the kit and deploy it in their own factory.

"We are worried it [the equipment] could fall into the wrong hands and that this could cause problems in our relations with the US government," one loquacious source close to one of the Korean companies said.

Another source at a trader in secondhand chipmaking kit, told the FT: "Some Chinese buyers have been selling tools on to Russia, so [the chipmakers] are scared of a backlash from the US side about that too."

Not everyone is happy with being leaned on by Washington to go along with its foreign policy goals. Nikkei Asia reports that Japanese officials and companies have been taken aback by the pressure, and quotes the country’s Trade and Industry Minister as saying "We have no plans to take new measures at this time."

The US has turned the screws on export restrictions to China multiple times to curb the nation's access to advanced tech over secuirty fears, and it could do so again, Secretary of Commerce Gina Raimondo said this week.

She is also concerned that global production of chips is concentrated in too few nations.

According to reports, Raimondo told attendees at an event in the Philippines that it was vital China did not have access to the most sophisticated technologies for their military advancement.

“We will do whatever it takes to protect our people, including expanding our controls,” Raimondo told reporters in Manila, according to Bloomberg.

Earlier this week it emerged that Washington was planning to blacklist more China-based technology companies by adding them to the Entity List maintained by the Department of Commerce’s Bureau of Industry and Security.

Being on the Entity List means that any company or individual that wishes to export or transfer technology to the listed organization must obtain a license for this purpose.

One company said to be among those to be listed is memory chipmaker Changxin Memory Technologies (CXMT), with a further five also being considered.

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Raimondo also voiced concerns that the semiconductor industry is too heavily concentrated in just a few places. This is presumably a reference to Taiwan, home of contract manufacturer TSMC, which accounted for 58 percent of the global semiconductor wafer market in Q3 last year.

US companies have realized that “our chip supply chain is way too concentrated in just a few countries in the world,” Raimondo said, comparing the situation to the old adage about putting all your eggs in one basket. “Why do we allow ourselves to be buying so many of our chips from one or two countries? That’s why we need to diversify,” she said.

For this reason, the US is encouraging nations in Southeast Asia to deepen investment into the semiconductor industry, following the announcement this week that American businesses are set to invest more than $1 billion in the Philippines.

Many chip companies are setting up facilities in Malaysia, including Micron, Intel and Infineon, as well as Chinese manufacturers. ®