How China Saved Samsung's Business
The South Korean tech giant Samsung is in trouble: despite massive investments in chip production in the U.S., the company has been unable to attract major American clients. Facing increasing export restrictions from Washington, Samsung has increasingly shifted its focus to China, as demand for AI chips continues to grow there.
According to the Financial Times, Samsung's shipments to China increased by 54% last year. Additionally, the South Korean company signed an agreement with Kunlun, a Chinese company under Baidu, to sell it key AI chip manufacturing component inventory for more than three years.
However, this adjustment toward the Chinese market is taking place against the backdrop of escalating Sino-U.S. technology confrontation. The U.S. authorities continue to strengthen export controls on high-tech components, particularly in the field of artificial intelligence, to restrict China's technological development.
In the meantime, Samsung continues to invest in the U.S. – the company has announced plans to invest $40 billion in a factory in Texas, where it plans to produce and package advanced chips. However, despite its efforts, Samsung has lost out to its competitor TSMC, which has attracted many large American clients and is building a new factory in Arizona.
Another South Korean company, SK Hynix, has become the leader in the HBM (high-bandwidth memory) chip market, an important component for artificial intelligence, posing further challenges for Samsung. SK Hynix has already supplied such chips to giants like Nvidia and AMD, and recorded its first-ever quarterly profit surpassing Samsung.
This is also why Samsung has turned its attention to Chinese companies. Due to export restrictions, Chinese companies cannot purchase HBM chips from SK Hynix. Meanwhile, unrestricted lower-grade chips are ready to be purchased in large quantities by China. Therefore, Samsung can secure a foothold in the Chinese market.
The Financial Times summarized that experts believe that despite various restrictions, Chinese companies will strive to acquire any possible chips. In this way, companies struggling to compete globally can improve their situation through the Chinese market.
Original article: https://www.toutiao.com/article/1828575267559556/
Disclaimer: This article solely represents the views of the author.