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Shanghai — US chip toolmaker KLA will cease offering some supplies and services from Wednesday to China-based customers including South Korea’s SK Hynix in compliance with new US regulations, a source familiar with the situation said.
The move underscores huge business headwinds facing chipmakers and chip equipment makers around the world, as the Biden administration published a sweeping set of export controls on Friday aimed at slowing China’s progress in advanced chip manufacturing.
China is KLA’s largest geographic market, bringing in $2.66bn in sales, or nearly 30% of its total revenue in the last fiscal year that ended in June, according to the company’s financial filings.
Under the new US regulations, companies looking to supply Chinese chipmakers with advanced manufacturing equipment must first obtain a licence from the US department of commerce.
The source, who declined to be identified due to the sensitivity of the matter, said staff in China received an email from KLA’s legal department stating that effective 3.59pm GMT on Tuesday, the company shall stop sales and service to “advanced fabs” in China for technology of NAND chips with 128 layers or more, and DRAM chips 18nm and below, and advanced logic chips.
“Our top management team has told us to relax for a couple of months,” the source who was briefed on the matter said.
KLA did not immediately respond to a request for comment.
The source added that the company would also cease supplying China chip plants owned by Intel and SK Hynix, the world’s second-largest memory chipmaker.
Reuters previously reported that foreign companies with fabs in China looking to receive advanced chip manufacturing equipment would have their licence applications reviewed on a case-by-case basis, while applications to supply Chinese fabs would be reviewed with through a “presumption of denial” standard.
SK Hynix reiterated its stance that it would seek a licence under new US export control rules for equipment to keep operating its factories in China. Intel did not immediately respond to a request for comment.
China’s two leading memory chipmakers — Yangtze Memory Technologies, Changxin Memory Technologies — and contract chipmaker Semiconductor Manufacturing International are among the customers affected by the US export control.
Another source at an overseas chip equipment company said that all of the suppliers to fabs were working round-the-clock to assess the long-term impact of the regulations. “We are all overreacting at first, while the legal teams work out the details for every piece of software and equipment that could be affected.”
Shares in KLA tumbled nearly 5% on Monday, hit by the latest US export control measures.
Along with Lam Research and Applied Materials, KLA is among top US toolmakers now required to halt shipments to wholly Chinese-owned factories producing advanced chips.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
US chip toolmaker KLA to stop sales to China
Shanghai — US chip toolmaker KLA will cease offering some supplies and services from Wednesday to China-based customers including South Korea’s SK Hynix in compliance with new US regulations, a source familiar with the situation said.
The move underscores huge business headwinds facing chipmakers and chip equipment makers around the world, as the Biden administration published a sweeping set of export controls on Friday aimed at slowing China’s progress in advanced chip manufacturing.
China is KLA’s largest geographic market, bringing in $2.66bn in sales, or nearly 30% of its total revenue in the last fiscal year that ended in June, according to the company’s financial filings.
Under the new US regulations, companies looking to supply Chinese chipmakers with advanced manufacturing equipment must first obtain a licence from the US department of commerce.
The source, who declined to be identified due to the sensitivity of the matter, said staff in China received an email from KLA’s legal department stating that effective 3.59pm GMT on Tuesday, the company shall stop sales and service to “advanced fabs” in China for technology of NAND chips with 128 layers or more, and DRAM chips 18nm and below, and advanced logic chips.
“Our top management team has told us to relax for a couple of months,” the source who was briefed on the matter said.
KLA did not immediately respond to a request for comment.
The source added that the company would also cease supplying China chip plants owned by Intel and SK Hynix, the world’s second-largest memory chipmaker.
Reuters previously reported that foreign companies with fabs in China looking to receive advanced chip manufacturing equipment would have their licence applications reviewed on a case-by-case basis, while applications to supply Chinese fabs would be reviewed with through a “presumption of denial” standard.
SK Hynix reiterated its stance that it would seek a licence under new US export control rules for equipment to keep operating its factories in China. Intel did not immediately respond to a request for comment.
China’s two leading memory chipmakers — Yangtze Memory Technologies, Changxin Memory Technologies — and contract chipmaker Semiconductor Manufacturing International are among the customers affected by the US export control.
Another source at an overseas chip equipment company said that all of the suppliers to fabs were working round-the-clock to assess the long-term impact of the regulations. “We are all overreacting at first, while the legal teams work out the details for every piece of software and equipment that could be affected.”
Shares in KLA tumbled nearly 5% on Monday, hit by the latest US export control measures.
Along with Lam Research and Applied Materials, KLA is among top US toolmakers now required to halt shipments to wholly Chinese-owned factories producing advanced chips.
Reuters
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