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| SK hynix's semiconductor factory in Wuxi, China / Courtesy of SK hynix |
Concerns grow over US-China trade war's impact on Korean chipmakers
By Park Jae-hyuk
SK hynix's stock price fell sharply on Friday, following a report that the Korean firm's memory chips were used in the latest smartphone from Huawei Technologies. But the Korean company claims it has been abiding by U.S. restrictions on chip exports to China.
The chipmaker's stock price plunged nearly 5 percent during intraday trading on Friday and closed at 113,700 won ($85), down 4.05 percent from the previous session.
Over the past three years, the U.S. government has banned international suppliers of advanced technology from dealing with Huawei, due to fears of their hardware being used to aid China's military.
SK hynix claimed it is strictly abiding by the U.S. export restrictions, while Huawei has remained silent on how it secured the Korean firm's products.
"SK hynix no longer does business with Huawei since the introduction of the U.S. restrictions against the company. And with regard to the issue, we started an investigation to find out more details," the company said in a statement.
Korea Investment Securities analyst Chae Min-sook said there is a slim chance that the recent revelation will lead to U.S. sanctions being placed on SK hynix's business in China.
However, retail investors appear to be concerned about the possibility.
Some of them even questioned the credibility of SK hynix's explanation, considering that SK Group Chairman Chey Tae-won has continuously emphasized the importance of the Chinese market, despite the exodus of Korean companies from the world's second-largest economy.
"As Korea's largest trade partner, China is an irreplaceable market," Chey told reporters in July. "If we abandon the Chinese market, there will be significant damage to our economy."
SK hynix has its factory in the Chinese city of Wuxi, but the company has imported all products from the factory to Korea and then exported them globally.
"Amid China's ban on the use of iPhones by government staff, the news on Huawei caused fears over the possibility that the U.S. Department of Commerce may sanction SK hynix," Mertiz Securities analyst Kim Sun-woo said.
The Chinese government recently ordered government officials not to use Apple smartphones at work, in an apparent retaliation against the U.S. sanction on Huawei.
This measure has further weakened investor sentiment regarding the semiconductor sector.
"Apple has relied nearly 20 percent of its iPhone sales on China," Hi Investment & Securities analyst Song Myung-sup said. "Chipmakers selling DRAM and NAND for iPhone may face a negative impact, as family members of Chinese government staff could be subject to the order."
Industry officials are also on alert as the recent incident may prompt the U.S. government to refuse extending a waiver on restrictions of semiconductor equipment exports to Chinese factories of Samsung Electronics and SK hynix, which will expire on Oct. 11.
Because the government has continued talks with the U.S. on this issue, there was an optimistic outlook about the extension.
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