SK Hynix may have to stop making memory chips in China

Memory maker SK Hynix is ​​facing the reality that it might need to pull out of China and find another place to manufacture its chips.

As the Associated Press reports(Opens in a new window), the recent series of US export restrictions targeting China is not only having a negative impact on Chinese companies. SK Hynix, which has a manufacturing facility in eastern China’s city of Wuxi, is now preparing for a future where it leaves the country. Indeed, the advanced machinery (extreme ultraviolet lithography systems) needed to manufacture its products will potentially not be available in China.

So far, the South Korean company has managed to secure a one-year exemption from export restrictions, which the US Department of Commerce distributes on a case-by-case basis. But what happens when the exemption ends and is not renewed?

According to SK Hynix Marketing Manager Kevin Noh, “If this were to become a situation where we were to license (US) tool by tool, it would disrupt equipment supply…and we could have difficulty operating (Chinese) manufacturing facilities well before the end of the 2020s.”

In what Noh describes as a “potentially very extreme situation”, SK Hynix is ​​reportedly considering selling its manufacturing facilities and equipment located in Wuxi and moving its operations to South Korea. Equipment may even be shipped out of China when the company leaves.

News of a potential China exit was accompanied by the release of the company’s third quarter results(Opens in a new window)which revealed that revenue fell by 7%, operating profit by 60% and net profit by 67%.

SK Hynix explained that the steep declines are due to “the semiconductor memory industry facing an unprecedented deterioration in market conditions as uncertainties in the business environment continue. The deterioration s came as shipments from PC and smartphone makers, who are the main buyers of memory chips, declined.”