The US Department of Commerce's Bureau of Industry and Security (BIS) has expanded semiconductor export controls to include high bandwidth memory (HBM), a crucial component for artificial intelligence and high-performance computing. This strategic move raises concerns over the impact on Samsung Electronics, which sells specific HBM products to mainland China.
Regulations extend beyond US borders
The new rule leverages the Foreign Direct Product Rule (FDPR), which stipulates that products using US software, equipment, or technology are subject to the ban, even if manufactured abroad. The expansion reflects the US government's view that advanced technologies like HBM are vital to national security and its determination to curb China's AI advancement.
Samsung faces greater exposure than rivals
While SK Hynix remains largely insulated by supplying HBM primarily to US tech giants, Samsung's significant exposure to China through lower-tier HBM products like HBM2 creates greater vulnerability. Analysts estimate that China accounts for 20% of Samsung's HBM revenue, potentially compromising its market share and profitability in this high-value segment.
Strategic pivot needed
Industry experts emphasize the necessity for Samsung to diversify beyond China, strengthen ties with Nvidia, and address its technological gap. Despite these challenges, Samsung could regain momentum if it secures supply deals with Nvidia, which dominates over 90% of the global AI chip market.
China's response and market impact
In a related development, China's antitrust probe into Nvidia has drawn attention, though analysts expect limited impact. Following US restrictions, Nvidia's market share in China has declined dramatically from over 90% to 17%, but the implications for partners like Samsung and SK Hynix remain unclear.
