S. Korean chipmakers brace for impact from U.S. sanctions against Russia

All News 16:52 February 25, 2022

SEOUL, Feb. 25 (Yonhap) -- South Korean chipmakers will be affected by export controls that Washington imposed on Russia over the Ukraine crisis, but the impact is not likely to be significant, experts said Friday.

The U.S. Commerce Department announced new sanctions Thursday that it said "will severely restrict Russia's access to technologies and other items that it needs to sustain its aggressive military capabilities."

Items subject to the export control measures include semiconductors, computers, telecommunications and information security equipment, among others, the department said, calling them "sensitive items Moscow relies on for its self defense, aerospace and maritime industries."

The measures restrict exports of any product that uses American technology or equipment to Russia, even if it is not produced in the United States.

As with most global chipmakers, Samsung Electronics Co. and SK hynix Inc. rely on American technology, to some extent, to make semiconductors. They are the world's two largest memory chip makers.

While the chipmakers will be affected by the technology control measures, their meager trade volume with Russia suggests that the impact will be minimal.

South Korea's chip exports to Russia came to US$74 million last year, which accounted for just 0.06 percent of the country's total export.

The companies' respective export data to Russia were not available.

Globally, Russia takes up less than 0.1 percent of global chip sales, according to the World Semiconductor Trade Statistics.

Still, the sanctions could slow down demand for chips, and by extension, consumer appliances and smartphones that use them, said Park Jae-gun, chairman of the Korean Society of Semiconductor & Display Technology.

"The sanctions will restrict export of chips used in smartphones, laptops and data centers in Russia. Although the amount is not much, the export control on electronics products could dampen chip demand," he said.

The restrictions could cripple Samsung's mobile business in Russia, as application processors for mobile phones are based on American technology.

Samsung was the leading mobile device vendor in Russia last year, occupying around 26.6 percent of the market, closely followed by Apple, according to German market researcher Statista.