Samsung, SK Hynix deepen China supply purge, reshaping $160B memory market

South Korea's top two memory makers are cutting Chinese equipment from supply chains, threatening $4.5 billion in annual procurement.

Samsung Electronics and SK Hynix are evaluating replacements for Chinese-owned Mattson Technology equipment and demanding suppliers avoid selling identical products to Chinese fabs, escalating a semiconductor supply chain decoupling that threatens billions in cross-border procurement.

"The de-Sinicization is moving from equipment to components," said an industry analyst at a Seoul-based research firm who tracks memory supply chains. "This is no longer just about geopolitics — it's about securing access to advanced nodes."

The move follows TSMC's earlier exclusion of Chinese equipment, including etching tools from Advanced Micro-Fabrication Equipment Inc. (AMEC), from its 2nm production line. Samsung and SK Hynix are specifically targeting Mattson Technology, a US-headquartered firm acquired by Beijing's E-Town Capital in 2016 that supplies photoresist stripping and rapid thermal processing systems. The two Korean companies have also instructed parts suppliers to avoid selling identical components to Chinese semiconductor manufacturers, according to Korean media reports on July 7.

The supply chain restructuring comes as the memory industry enters a supercycle driven by AI demand. Samsung is considering a 20% DRAM price hike for the third quarter, according to reports, while SK Hynix dominates the high-bandwidth memory (HBM) market alongside Nvidia's AI accelerators. For Chinese equipment makers, the purge threatens to cut off access to the world's two largest memory producers, which together control more than 70% of the $160 billion DRAM market.

Who Wins, Who Loses in the Supply Chain Shuffle

The impact cascades unevenly across China's semiconductor supply chain. Equipment makers face the most immediate exposure. AMEC, already excluded from TSMC's 2nm line, could lose additional revenue if Korean memory makers follow suit. Northern China Capital (NCCM) and ACM Research, while not yet directly affected, face growing risk as the decoupling spreads from equipment to components.

Packaging firms show a structural divergence. Haitai Semiconductor, a joint venture between SK Hynix and Wuxi-based Taiji Industrial, is directly tied to Korean demand and faces order uncertainty. By contrast, Taiji Semiconductor — a core supplier to ChangXin Memory Technologies (CXMT) — and JCET, China's largest chip packaging firm, stand to benefit as domestic fabs accelerate capacity expansion to fill the gap left by foreign equipment restrictions.

Materials suppliers face limited near-term impact. Yakult, which supplies HBM precursors to SK Hynix, deals in chemical materials not yet on the replacement list. But the risk exposure remains, analysts said.

The strongest beneficiaries are chip design firms. GigaDevice and Beijing Zhaoxin operate fabless models with predominantly domestic customer bases, insulating them from the decoupling. The external friction accelerates the domestic substitution timeline, with Samsung and SK Hynix's gradual exit from legacy DDR3 markets releasing pricing power to Chinese competitors.

China's Memory Ambitions Meet a Technology Wall

The supply chain purge coincides with China's most aggressive push into memory production. CXMT, the country's leading DRAM maker, has grown its global revenue share to 8% in 2026 from 3% a year earlier, making it the fourth-largest DRAM producer. The company operates two 12-inch fabs with combined capacity of about 300,000 wafers per month and plans to double that to 600,000 wafers with a new Shanghai facility, according to Reuters.

But technology constraints limit CXMT's ambitions. Without access to ASML's extreme ultraviolet (EUV) lithography machines — blocked by US export controls — CXMT's DDR5 die is roughly 40% larger than Samsung's equivalent, yielding fewer usable chips per wafer. Its cost per bit remains more than 30% above the three leading suppliers, suggesting current profitability depends on unusually strong market pricing rather than genuine manufacturing efficiency.

The gap is starker in HBM, the premium memory segment driving the AI boom. CXMT has only sampled HBM2 and HBM3 chips with customers like Huawei, while commercial-volume production keeps slipping. Rivals Samsung and SK Hynix are already shipping HBM4, the fourth generation of high-bandwidth memory.

For investors, the decoupling creates a bifurcated opportunity. Chinese fabless memory designers and packaging firms tied to domestic capacity represent the clearest beneficiaries of the substitution narrative. Equipment makers exposed to Korean and Taiwanese customers face valuation risk as revenue visibility deteriorates. The broader question — whether China's memory industry can bridge the technology gap without EUV access — will determine whether today's supply chain disruption becomes a temporary realignment or a permanent restructuring of the $160 billion memory market.

This article is for informational purposes only and does not constitute investment advice.