US curbs on Nvidia chips to have only limited impact on Korean chipmakers: experts

A display at the exhibition booth installed at the NVIDIA GTC Conference 2024 shows that SK hynix supplies its eight-layer HBM3E, the fifth-generation high bandwidth memory (HBM), for the H20 chips, at San Jose McEnery Convention Center, Calif., U.S., March 19, 2024. Yonhap

Korean chipmakers will likely face only limited impact from the new U.S. restrictions on exports of Nvidia's H20 artificial intelligence (AI) accelerators to China, experts here said Wednesday.

Nvidia said it has been notified by U.S. authorities that the company now requires a license to export its H20 chips to China for the indefinite future.

The H20 accelerators were the most advanced AI chip the company could still export to China under the existing U.S. export ban on high-performance AI chips.

SK hynix supplies its eight-layer HBM3E, the fifth-generation high bandwidth memory (HBM), for the H20 chips. Samsung Electronics does not supply HBM for this particular chip.

Experts say the new regulation is unlikely to significantly affect the Korean semiconductor firms in the short term, as SK hynix is currently focused on its latest 12-layer HBM3E, a key component in high-performance AI chips destined for markets outside China.

Additionally, SK hynix has already finalized its HBM sales contracts for the H20 chips, meaning the new export restrictions will not affect its balance sheet, according to the experts.

Nvidia has said it expects to take a $5.5 billion charge due to the new regulation on its H20 chip exports to China. Nvidia shares fell about 6 percent in after-hours trading.

"SK hynix completed additional sales of HBM for H20 in March, so it will not face inventory write-downs like Nvidia," Chae Min-sook, a researcher at Korea Investment & Securities Co., said. "We estimate that the sanctions will not change SK hynix's annual HBM production plan or its earnings estimates."

While the direct impact on Korean chipmakers appears limited, industry insiders are expressing concerns about a broader slowdown in China's AI chip market, which had recently surged on low-cost AI models from companies like DeepSeek.

"Although the U.S. restriction has no direct impact, it could dampen momentum in the AI chip business and limit future opportunities," an official at a Korean semiconductor firm said. "It has also increased uncertainty and concerns over the industry's future outlook."

Shares of SK hynix and Samsung Electronics finished 3.65 percent and 3.36 percent lower, respectively, on the Korea Composite Stock Price Index, which fell 1.21 percent.