Chinese Companies Stockpile Samsung Chips Before US Export Rules

Chinese technology companies, including industry leaders Huawei and Baidu, are significantly increasing their purchases of high bandwidth memory (HBM) semiconductors from Samsung Electronics. This surge in demand comes as these firms anticipate potential US restrictions on chip exports to China. Sources indicate that this buying spree has enabled China to account for approximately 30% of Samsung's chip revenue in the first half of 2024, highlighting the growing impact of geopolitical tensions on the global semiconductor supply chain. The US Department of Commerce has not provided specific comments on the situation but has previously stated its commitment to reassessing export controls to safeguard national security and technological integrity. HBM chips are essential for developing advanced processors, particularly for generative AI applications, with only three major manufacturers—Samsung, SK Hynix, and Micron Technology—producing these critical components. Chinese demand has primarily focused on the HBM2E model, which is two generations behind the latest HBM3E version. The global AI boom has exacerbated supply constraints for the more advanced chips. Huawei is reportedly utilizing Samsung's HBM2E semiconductors to enhance its Ascend AI chip capabilities, while other Chinese firms are making strides in HBM production, albeit with older technology. Experts suggest that potential restrictions on HBM sales to China could disproportionately affect Samsung, which relies heavily on the Chinese market compared to its competitors. SK Hynix has announced plans to boost HBM3E production, indicating a strategic shift in response to the evolving market dynamics.