Korean chip biz to be hurt by US’s Huawei sanctions

US sanction against Huawei will likely negatively affect South Korea’s semiconductor industry if the Chinese tech giant faces difficulty in its smartphone production, a South Korean government research institute said.

If Huawei is reduced to a mid-tier phone maker from US interference, the company will likely use local Chinese vendors who offer semiconductors cheaper instead of South Korean suppliers as it does now, the Korea Institute for International Economic Policy (KIEP) said in a report published Friday.

The long-term affect of the sanctions will also harm South Korea’s semiconductor industry, as China put in efforts to secure semiconductor production competence of its own without relying on US technology.

However, as seen in Western countries’ avoidance in using Huawei telecom equipment for their 5G networks, these countries may also avoid China-made semiconductors. This will isolate Chinese semiconductor companies to their own country and cannibalize each other, KIEP said.

Meanwhile, the institute also said there was no noticeable affect on Samsung Electronics and SK Hynix, which supplies memory chips to Huawei, since US sanctions.

Huawei accounted for 6% of Samsung’s revenue and 15% of SK’s, KIEP said, making SK more vulnerable to the issue.