Both US and China press Korean tech giants
Samsung Electronics and SK hynix appear to be facing a troubling time as both the United States and China are pressing the semiconductor manufacturers to take their side in their expanding trade dispute, while the Korean government seems unready, or unable, to chime in.
The world’s two economic powerhouses are now at war after the U.S. banned sales of major American technological products to certain Chinese companies.
In particular, the Trump administration effectively bars U.S. companies from selling components and software to Chinese technology behemoth Huawei, which is accused of having stolen trade secrets and enabled the conducting of surveillance of its customers.
Google, Facebook, Intel, and Qualcomm are following the order.
For example, Google recently stopped supporting hardware and software services previously supplied to Huawei, which could restrict the Chinese tech giant’s access to future versions of the Android operating system.
This means that Huawei will not be able to compete with its mobile phone rivals outside of China because Android is the dominant platform for smartphones other than Apple’s iPhones.
In addition, the fallout from Qualcomm and Intel complying with the ban will lead to a lack of semiconductor supplies to many Chinese companies, which depend on chips manufactured outside of the communist country.
Huawei is the world’s second-largest manufacturer of smartphones, chasing only Samsung Electronics.
For them, there are two major alternatives for Samsung Electronics and SK Hynix – both based in Korea – the two leading producers of memory chips.
In this climate, Washington demands that Seoul should play by its rules in cornering Huawei. South Korea counters that business issues are up to Samsung and SK, not the government.
China is by no means sitting idly by.
According to the New York Times, Beijing summoned officials from major tech companies including Samsung and SK hynix early this month to warn them that “they could face dire consequences if they cooperate with the Trump administration’s ban on sales of key American technology to Chinese companies.”
Neither Samsung nor SK hynix confirm that they took part in this meeting.
If the report is correct, however, Samsung and SK hynix are in a predicament. For one, up to 39 percent of SK hynix’s sales came from China last year with Huawei accounting for 12 percent.
Should it stand by the United States, SK hynix will see two-fifths of its sales disappear instantly. But it cannot just ignore the demand from the U.S., Korea’s strongest ally.
Naturally, the two companies hope that the Seoul administration will offer guidance. However, the government has repeated its reservations, saying that the issue is an economic one, not a political one.
“Eventually, the Korean government should come up with its own stance to guide private companies like Samsung and SK hynix,” said an industry source who asked not to be named.
“We hope that the Moon Jae-in administration is working on that through talks with both Washington and Beijing. Otherwise, the country’s semiconductor companies would be in big trouble.”