Limited Impact of US Export Restrictions on South Korean Chipmakers

Experts Assess the Ramifications of Nvidia’s Export License Requirement

In a recent development, South Korean chipmakers are expected to experience only minimal effects from the United States’ newly imposed restrictions on the export of Nvidia’s H20 artificial intelligence (AI) accelerators to China. This assertion comes from experts based in Seoul as reported on Wednesday.

Nvidia announced that the US authorities have mandated that the company now requires a license to export its H20 chips to China indefinitely, according to the Yonhap news agency.

The H20 accelerators represent the most advanced AI chip that Nvidia can still export to China under the existing US export ban applicable to high-performance AI chips.

Focus on New Technologies by SK Hynix

One of the leading players in the industry, SK hynix, supplies its eight-layer HBM3E, which is the fifth generation of high bandwidth memory (HBM) utilized in the H20 chips. Notably, Samsung Electronics Co. does not provide HBM for this specific chip.

Industry experts indicate that the recent regulatory changes are unlikely to significantly impact South Korean semiconductor firms in the immediate future. This is primarily due to SK hynix’s current focus on its latest 12-layer HBM3E, an essential component in high-performance AI chips intended for markets beyond China.

Existing Contracts Mitigate Financial Risk

Additionally, SK hynix has already finalized its sales contracts concerning the H20 chips, ensuring that the new export restrictions will not adversely affect its balance sheet.

Nvidia Braces for Financial Pressure

In light of these export limitations, Nvidia anticipates a substantial financial impact, with expectations of a $5.5 billion charge due to the regulations affecting its H20 chip exports to China. Consequently, Nvidia shares experienced a decline of approximately 6 percent in after-hours trading.

Industry Concerns Over Market Dynamics

“SK hynix completed additional sales of HBM for H20 in March, so it will not face inventory write-downs like Nvidia,” stated Chae Min-sook, a researcher at Korea Investment & Securities Co. “We estimate that the sanctions will not alter SK hynix’s annual HBM production plan or its earnings forecasts.”

Despite the limited direct impact on South Korean chipmakers, there is growing concern among industry insiders regarding a general slowdown in China’s AI chip market. This market had previously surged due to low-cost AI models offered by companies such as DeepSeek.

“Although the U.S. restrictions do not impose a direct impact, they could dampen momentum within the AI chip sector and restrict future growth opportunities,” expressed an official from a South Korean semiconductor firm. “These changes have also heightened uncertainty and raised concerns about the industry’s outlook.”

Market Reaction

Reflecting these dynamics, shares of SK hynix and Samsung Electronics concluded the trading day down 3.65 percent and 3.36 percent, respectively, on the Korea Composite Stock Price Index, which itself declined by 1.21 percent.

Conclusion

While the immediate implications of the US export restrictions on Nvidia’s H20 chips appear limited for South Korean semiconductor firms, the broader effects on the AI chip market in China and future prospects remain a point of concern.