Report: Samsung and SK Hynix Test Chinese Chipmaking Equipment at China Plants to Guard Against Escalating US Controls

South Korean memory chip giants Samsung Electronics and SK Hynix are evaluating and testing locally manufactured semiconductor etching equipment at their factories in China. The move aims to hedge against the risk of supply chain disruptions caused by potential further tightening of US export controls.

According to Reuters, amid uncertainty surrounding Washington's technology export policies toward China, the two South Korean companies are treating Chinese suppliers as backup options to keep existing production lines running, but no large-scale procurement decisions have been made yet.

For the relevant Chinese suppliers, gaining approval from Samsung or SK Hynix would constitute a global endorsement with significant commercial value. Samsung denied in a statement that it had tested the aforementioned equipment; SK Hynix declined to comment.

Policy Uncertainty Spurs "Backup Plans"

In 2023, the US Department of Commerce designated facilities related to Samsung and SK Hynix as "Validated End-Users" (VEU), allowing them to import certain controlled US equipment without applying for licenses on a case-by-case basis. In 2025, Washington revoked this status and subsequently issued annual licenses for 2026 to both companies, permitting them to continue introducing chipmaking equipment into their facilities in China.

Nevertheless, according to insiders, both companies remain concerned that future restrictions could extend further to cover the maintenance, repair, or replacement of parts for already installed Western equipment. Driven by this concern, the South Korean chipmakers have included Chinese suppliers as backup options, not to expand capacity in China, but to maintain normal operations and upgrade capabilities for existing production lines.

Samsung operates a NAND flash memory chip factory in Xi'an, while SK Hynix has a NAND production facility in Dalian and operates a DRAM chip factory in Wuxi. The two companies' factories in China rely heavily on US suppliers such as Applied Materials and Lam Research for etching equipment.

Chinese Local Equipment Makers Gain Validation Opportunities

For China's semiconductor equipment industry, these tests represent a window for qualification validation. Insiders stated that the relevant Chinese etching equipment has already been adopted by leading domestic memory chip manufacturers, giving Samsung and SK Hynix initial confidence in the maturity of some systems.

Dan Hutcheson, Vice Chairman of research firm TechInsights, pointed out that Chinese equipment is typically priced 20% to 30% lower than comparable foreign equipment. Chinese equipment makers have significantly narrowed the gap with overseas competitors in areas such as etching, deposition, cleaning, and planarization.

Deutsche Bank estimates that several Chinese semiconductor equipment companies will each achieve revenues exceeding $1 billion in 2026, collectively accounting for 25% to 30% of China's approximately $28 billion wafer fabrication equipment market. If lithography and metrology equipment are excluded, the share held by Chinese suppliers could approach 40%.

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