As Chinese semiconductor corporations aggressively invade the legacy semiconductor market with low-priced products, the U.S. government is expected to consider strengthening regulations on legacy semiconductors, including imposing additional tariffs. Attention is focused on whether domestic companies struggling in the legacy semiconductor business due to the Chinese influx will benefit.
Starting on the 11th (local time), the U.S. Trade Representative will hold hearings regarding Chinese legacy semiconductors. The hearings, which began during the Biden administration in December of last year, aim to protect the U.S. and other semiconductor industries from the aggressive influx of semiconductors. The U.S. is expected to discuss options, including additional tariffs on Chinese legacy semiconductors.
Chinese semiconductor corporations are proactively seizing the relatively unregulated legacy semiconductor market amid U.S. restrictions on advanced semiconductor industries. Corporations like CXMT, which has been established for less than 10 years, account for around 10% of the DRAM market share. Foundry corporations such as SMIC hold a 6% share in the global market (based on revenue), ranking third after Samsung Electronics, thanks to demand from the Chinese domestic market. Market research firm TrendForce projected, "By the end of this year, the legacy process market share of Chinese foundries among the world's top 10 foundries will reach 25%."
As U.S. corporations become increasingly reliant on Chinese legacy semiconductors, it is presumed that the U.S. government is reviewing options for strengthening regulations. The U.S. Department of Commerce pointed out in a report last December that "two-thirds of U.S. electronic products contain semiconductors produced through Chinese legacy processes," adding, "Some are also related to U.S. defense corporations."
TrendForce stated, "Beginning with the hearings, the U.S. plans to strengthen controls on the Chinese legacy semiconductor industry to curb rapidly growing corporations," and analyzed that it will aim to address the price decline pressure imposed on the global market due to the low-priced influx from Chinese corporations.
With the strengthening of U.S. regulations on legacy semiconductors from China, there are opinions suggesting that domestic semiconductor corporations may benefit. This is based on the reasoning that if the prices of legacy semiconductors, which have seen continuous declines due to Chinese low-priced products, stabilize, the profitability of domestic memory semiconductor corporations may improve.
Kim Yang-pyeong, a researcher from the Korea Institute for Industrial Economics and Trade, noted, "Samsung Electronics and SK hynix, among others, are shrinking their business scale due to the erosion of profitability in legacy semiconductors like DDR4 caused by the influx of Chinese corporations. However, if Chinese corporations are disrupted by U.S. regulations, related demand may shift to domestic corporations, potentially benefiting them."
There are also analyses suggesting that corporations engaged in legacy foundry processes, such as Samsung Electronics, DB HiTek, and SK keyfoundry, could benefit. An industry official stated, "Foundry corporations in China, like SMIC, have narrowed the market share gap with Samsung Electronics' foundry division to around 3 percentage points (P) based on domestic demand. If U.S. regulations escalate and the global business of Chinese foundry corporations shrinks, domestic corporations providing legacy processes may also receive benefits."