SEOUL–The equipment that makes the world’s most advanced memory chips has been at the center of the United States’ campaign to slow China’s semiconductor industry, and Washington has spent years restricting its export. The reality at the factories of South Korea’s two memory giants is more complicated than the policy suggests. Samsung Electronics and SK Hynix are testing chipmaking equipment from Chinese suppliers, according to The Diplomat, which reported the development Aug. 10.
The testing is a quiet but significant development in the semiconductor supply chain. Chinese equipment makers have been working for years to break into the market for fabrication tools, and their progress has been closely watched in Washington, where officials have assumed that advanced production would remain dependent on American, Dutch, and Japanese equipment.
The companies’ motivation is practical. Chinese equipment is cheaper than the Western and Japanese alternatives, and South Korean memory makers, facing rising costs and thin margins outside the AI segments, are exploring ways to reduce their capital spending. The testing does not mean the Chinese tools will replace advanced equipment overnight, but it means they are being evaluated seriously, according to people familiar with the companies’ plans.
The development exposes a gap in the export-control strategy. The United States has restricted the sale of advanced chipmaking equipment to China, but it cannot control what equipment Chinese companies produce themselves or what other countries choose to buy. If South Korean companies begin purchasing Chinese tools, Beijing gains both revenue and validation for its domestic equipment industry.
The stakes are larger than the equipment market itself. The U.S. strategy has assumed that China cannot build a competitive semiconductor industry without access to Western tools, and that assumption has shaped export controls across two administrations. Every Chinese tool that a major memory maker adopts weakens that assumption, regardless of how advanced the tool is.
The testing also reflects the diversification instinct that has spread through the semiconductor industry since the pandemic. Companies that once relied on a handful of equipment suppliers have sought alternatives as a hedge against supply disruptions and geopolitical shocks. Chinese suppliers, which have improved their reliability and performance over successive generations, are increasingly credible options for non-critical processes.
Neither Samsung nor SK Hynix is expected to use Chinese equipment in the most advanced stages of production, where precision requirements are extreme and the technology gap remains wide. But memory manufacturing includes many steps, from wafer handling to metrology to some deposition and etching processes, and Chinese tools have made inroads in those areas, according to industry engineers.
The Korean companies’ calculus involves Washington’s reaction. Both companies operate extensively in the United States and depend on access to American technology and markets, and they have been careful not to cross the lines drawn by U.S. policy. Testing Chinese equipment for auxiliary processes is different from adopting it for core production, and the companies are likely to calibrate their adoption to stay within Washington’s tolerance.
The broader trend is not limited to Korea. Equipment makers in Japan and Europe have also begun evaluating Chinese suppliers, and Chinese equipment has found customers across Southeast Asia. The U.S. export-control regime has slowed China’s access to advanced technology, but it has not stopped the development of China’s domestic equipment industry, which has continued to improve with state support.
The political response in Washington is predictable. Members of Congress who have pressed for tighter controls are likely to see the testing as evidence that the regime needs reinforcement, and the Commerce Department could face pressure to expand restrictions on equipment that incorporates U.S. technology. The difficulty is that much of the Chinese equipment in question has minimal U.S. content, leaving Washington few levers to pull.
The economic logic on the Korean side is powerful. Memory companies are in a capital-intensive business, and their spending on equipment is a major driver of their financial performance. Chinese equipment at a fraction of the cost of Japanese or Dutch alternatives is an attractive option, and the companies have shareholders who expect them to pursue it.
For the semiconductor industry, the testing is a signal about the future of the supply chain. The assumption that China would remain dependent on Western equipment is being tested in practice, and the results so far suggest a more fragmented market than the policy envisioned. The equipment that makes chips may eventually be made everywhere, and the export-control regime will have to adapt to that reality.
The companies involved have said little publicly, consistent with the sensitivity of the issue. Samsung and SK Hynix declined to comment on the specific testing, citing the competitive nature of their procurement decisions. The silence is itself a measure of the tension: two of the world’s most important chipmakers, navigating between the equipment they can afford and the policy environment they must survive.
