According to Nikki Asia, South Korea’s chip giant SK Hynix said on Wednesday that it might consider moving its memory chip production facilities out of China in case U.S. export controls restrictions hit its operations there.

SK Hynix Chief Marketing Officer Kevin Noh said during the company’s earnings call, “As a contingency plan, we are considering selling the fab, selling the equipment or transferring the equipment to South Korea.”

The remarks came right after the chip firm released its third quarter result on Wednesday, October 26, showing that its profit fell 60% from a year ago due to weakening global demand amid high inflation and economic downturn.

Earlier this month, the U.S. announced sweeping export control restrictions on chip-making equipment to China. Experts said that the move aims to cut off the communist regime’s access to U.S. technologies to build its military and boost its chip industry ambitions.   

SK Hynix received approval for a one-year waiver from the U.S. Department of Commerce two weeks ago to continue using U.S. technology to produce advanced memory chips in China. But the company does not know whether it will get the authorization renewed after the waiver period ends.

According to Reuters,  SK Hynix would cut its investment by over 50% as memory chip demand faces an “unprecedented deterioration,” deepening fears of a global recession.

Kevin Noh said, “We are hoping that the market will stabilize to some extent by [the] second half of next year, but we are not ruling out the possibility of a longer downturn.” 

SK Hynix is the world’s second-largest memory chipmaker, providing chips to top clients in the industry, including Apple. 

Reuters reported that other chipmakers have also started cutting their supply and investment. American firm Micron Technology plans to slash its investments by over 30% next year. Taiwan’s TSMC also has trimmed the firm’s 2022 investment plan.

Sign up to receive our latest news!

By submitting this form, I agree to the terms.