The amount of South Korea’s semiconductor equipment exported to China last year was around $1.37 billion, a 40% decrease compared to $2.258 billion in 2021, reported South Korean media ET News, citing trade statistics from the country’s Customs Service.

China actively purchased semiconductor equipment in 2021 due to chip shortages. Even considering that 2021 was a boom year, the fact that exports last year fell short of the $1.4 billion level between 2019 and 2020 indicates that the situation is serious for Korea.

A representative of a South Korean semiconductor equipment company said, “Due to the pandemic control, there are cases where it took several months from supplying equipment prototypes to performance evaluation,” and “some cases of delivery having to be given up.”

At the end of last year, it was predicted that the situation would improve as China eased its pandemic control. However, the US export regulations were tightened and got in the way. Now with the Netherlands and Japan to join in restricting exports to China, the situation worsens.

An industry insider said, “China has been looking for a lot of South Korean equipment as an alternative to US or Japanese equipment, but the story changes when export regulations are strengthened. Demand will inevitably decrease.”

China's leading semiconductor foundry SMIC and memory manufacturers YMTC and CXMT announced an increase in facility investment this year, but the actual investment is expected to decrease significantly. Because it is more challenging for it to bring in essential equipment, said the ET News report.

South Korea’s equipment industry was driven to the “double trouble” as its domestic demand weakened. Its local semiconductor manufacturers also started to reduce facility investment. The situation will get worse if the US presses South Korea to join export regulations in the future.

Lee Chang-Han, vice chairman of the Korea Semiconductor Industry Association, said that South Korean equipment makers mainly supply to the Chinese factories of Samsung Electronics and SK Hynix. They could be affected by US regulations in the future, according to ET News.

(Li PP)