US chip toolmaker KLA Corp would cease offering some supplies and services from today to China-based customers including South Korea’s SK Hynix Inc in compliance with recent US regulations, a source familiar with the situation said yesterday.
The move underscores huge business headwinds facing chipmakers and chip equipment makers around the world as US President Joe Biden’s administration on Friday published a sweeping set of export controls aimed at slowing China’s progress in advanced chip manufacturing.
China is KLA’s largest geographic market, bringing in US$2.66 billion in sales, or nearly 30 percent of its total revenue in the last fiscal year that ended in June, the company’s financial filings showed.
Under new US regulations, companies looking to supply Chinese chipmakers with advanced manufacturing equipment must first obtain a license from the US Department of Commerce.
The source, who declined to be identified due to the sensitivity of the matter, said that staff in China received an e-mail from KLA’s legal department stating that effective 11:59pm local time last night, the company would stop sales and service to “advanced fabs” in China for technology of NAND chips with 128 layers or more and DRAM chips 18 nanometers and below, and advanced logic chips.
“Our top management team has told us to relax for a couple of months,” said the source, who was briefed on the matter.
KLA did not immediately respond to a request for comment outside of working hours.
The source said the company would also cease supplying China chip plants owned by Intel Corp and SK Hynix, the world’s second-largest maker of memory chips.
Previously reports have said that foreign companies with fabs in China looking to receive advanced chip manufacturing equipment would have their license applications reviewed on a case-by-case basis, while applications to supply Chinese fabs would be reviewed through a “presumption of denial” standard.
SK Hynix reiterated its stance that it would seek a license 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 memorychip makers — Yangtze Memory Technologies Co (長江存儲) and Changxin Memory Technologies Inc (長鑫存儲) — and contract chipmaker Semiconductor Manufacturing International Corp (中芯國際) are among the major customers affected by the US export control.
None of the fabs immediately responded to requests for comment.
Another source at an overseas chip equipment company said that all of the major suppliers to fabs were working around-the-clock to assess the long-term effects 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,” the second source said.
Shares in KLA tumbled nearly 5 percent on Monday, hit by the latest US export control measures.
Along with Lam Research Corp and Applied Materials Inc, KLA is among top US toolmakers now required to halt shipments to wholly Chinese-owned factories producing advanced chips.
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