TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Chinese firms stockpile high-end Samsung chips as they await new US curbs: Sources

Heekyong Yang, Fanny Potkin and Karen Freifeld (Reuters)
Seoul/Singapore
Tue, August 6, 2024 Published on Aug. 6, 2024 Published on 2024-08-06T12:46:42+07:00

Change text size

Gift Premium Articles
to Anyone

Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Chinese firms stockpile high-end Samsung chips as they await new US curbs: Sources The Samsung Electronics “Nano city Hwasung Campus” semiconductor factory in Hwaseong, south of Seoul, glitters at night on Nov. 19, 2019. (AFP/Ed Jones)

C

hinese tech giants including Huawei and Baidu as well as start-ups are stockpiling high bandwidth memory (HBM) semiconductors from Samsung Electronics in anticipation of US curbs on exports of the chips to China, three sources said.

The companies have ramped up their buying of the artificial intelligence (AI) capable semiconductors since early this year, helping China account for about 30 percent of Samsung's HBM chip revenue in the first half of 2024, one of the sources said.

The moves show how China is gearing up to keep its technology ambitions on track amid rising trade tensions with the US and other western nations. They also show how the tensions are impacting the global semiconductor supply chain.

US authorities are planning to unveil an export control package this month that will impose new restrictions on shipments for China’s semiconductor industry, Reuters reported last week, citing sources.

Those sources also said the package is expected to lay out parameters for restricting high bandwidth memory chip access. The US Department of Commerce declined to comment but had said in a statement last week that it is continually assessing the evolving threat environment and updating export controls "to protect US national security and safeguard our technological ecosystem."

Reuters was unable to determine the details of the proposed HBM restrictions and how they would impact China.

Prospects

Every Monday

With exclusive interviews and in-depth coverage of the region's most pressing business issues, "Prospects" is the go-to source for staying ahead of the curve in Indonesia's rapidly evolving business landscape.

By registering, you agree with The Jakarta Post's

Thank You

for signing up our newsletter!

Please check your email for your newsletter subscription.

View More Newsletter

HBM chips are crucial components in developing advanced processors, such as Nvidia's graphics processing units that can be used for generative AI work.

There are only three major chipmakers producing HBM chips – SK Hynix and Samsung from South Korea and US-based Micron Technology.

Chinese chip demand has been largely focused on the HBM2E model, which is two generations behind the most advanced version HBM3E, said the sources who are familiar with China's interest in HBM. The global AI boom has led to a tightness in supply of the advanced model.

"Given that its domestic technology development is not yet fully mature, China's demand for Samsung's HBM has become exceptionally high, as other manufacturers’ capacities are already fully booked by American AI companies," said Nori Chiou, investment director at Singapore-based White Oak Capital Partners.

While it is hard to estimate the volume or value of the stockpiled HBM chips in China, businesses ranging from satellite manufacturers to tech firms such as Tencent have been buying them, the sources said. One of the sources said chip designing start-up Haawking recently ordered HBM chips from Samsung.

Huawei, meanwhile, has been using Samsung HBM2E semiconductors to make its advanced Ascend AI chip, according to one of the sources.

Samsung and SK Hynix declined to comment. Micron, Baidu, Huawei, Tencent and Haawking did not respond to requests for comment. The sources did not wish to be named due to the sensitivity of the subject.

SAMSUNG VS HBM RIVALS

Chinese firms have made some headway in producing HBM, with Huawei and memory chipmaker CXMT focusing on developing HBM2 chips, which are three generations behind the HBM3E model, Reuters reported earlier.

But those efforts could be impacted by the new US rule.

Restrictions on HBM sales to China could have a bigger impact on Samsung than its key rivals that rely less on the Chinese market, said the sources who were briefed on the sales.

Micron has refrained from selling its HBM products to China since last year, while SK Hynix, whose major HBM customers include Nvidia, focuses more on advanced HBM chip production, they said.

SK Hynix said earlier this year it is adjusting production to expand HBM3E output and its HBM chips were sold out for this year and almost sold out for 2025.

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.

Share options

Quickly share this news with your network—keep everyone informed with just a single click!

Change text size options

Customize your reading experience by adjusting the text size to small, medium, or large—find what’s most comfortable for you.

Gift Premium Articles
to Anyone

Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!

Continue in the app

Get the best experience—faster access, exclusive features, and a seamless way to stay updated.