© Reuters. FILE PHOTO: The logo of SK Hynix is seen at its headquarters in Seongnam, South Korea, April 25, 2016. REUTERS/Kim Hong-Ji
By Stephen Nellis, Joyce Lee and Toby Sterling
SEOUL (Reuters) -Plans by Korea’s SK Hynix to overhaul a huge facility in China so it can make memory chips more efficiently are in jeopardy, sources familiar with the matter told Reuters, because U.S. officials do not want advanced equipment used in the process to enter into China.
The potential setback could make SK Hynix, one of the world’s biggest suppliers of DRAM memory chips that go into everything from smartphones to data centers, the next https://www.reuters.com/article/us-xilinx-results/huawei-exposure-roils-xilinxs-revenue-forecast-idUSKBN1X22KV victim https://www.reuters.com/article/micron-tech-results/micron-yet-to-regain-license-to-sell-to-huawei-pressuring-sales-idUSKBN26L07P of the geopolitical struggle between the United States and China.
SK Hynix production plans call for the company to upgrade a mass production facility in Wuxi, China, with some of the latest extreme ultraviolet lithography (EUV) chipmaking machines made by Dutch firm ASML, three people with knowledge of the matter said.
The United States in the past has objected on the grounds that shipping such advanced tools to China could be used to strengthen the country’s military.
A senior White House official declined to comment specifically on the matter of whether U.S. officials would allow SK Hynix to bring EUV tools to China. But the official told Reuters the Biden administration remains focused on preventing China from using U.S. and allied technologies to develop state-of-the-art semiconductor manufacturing that would help China modernize its military.
The Wuxi factory is critical to the global electronics industry because it makes about half of SK Hynix’s DRAM chips, which amounts to 15% of the global total. Any major changes could have an impact on global memory markets, where analyst firm IDC says demand is growing at 19% in 2021 alone.
As newer styles of chips make up a greater share of SK Hynix’s production in two to three years, the company will need the EUV machines to control its costs and accelerate production, a source with knowledge of the company’s operations in China said.
The extent of the concerns inside of SK Hynix have not been previously reported. If the situation is not resolved in the next several years, SK Hynix could stand at a disadvantage against rivals such as No. 1 memory chipmaker Samsung Electronics (OTC:) Co Ltd and the United States’ Micron Technology (NASDAQ:), the other two major players in the DRAM market. Both Samsung (KS:) and Micron are also shifting to ASML’s EUV machines but are not using them at factory locations where the machines face export restrictions.
The question of the ASML machines has drawn enough concern within SK Hynix that Chief Executive Lee Seok-hee raised the issue with U.S. officials during a visit to Washington, D.C. in July, according to two people briefed on his visit.
SK Hynix declined to comment on the matter, adding that it operates flexibly according to various market environments and is doing its best to respond to market and customer demands without issue.
The Trump administration successfully mounted an extensive campaign https://www.reuters.com/article/us-asml-holding-usa-china-insight/trump-administration-pressed-dutch-hard-to-cancel-china-chip-equipment-sale-sources-idUSKBN1Z50HN to block the sale of ASML’s technology to China’s state-backed Semiconductor Manufacturing International Corp, lobbying the Netherlands government with White House officials sharing a classified intelligence report with the country’s Prime Minister.
An ASML spokesperson said that the company abides by all export control laws and views them as a “valid tool” for governments to ensure national security. But the company said the overuse of those controls “might impact the production capacity needed to stay ahead of the increasing demand of semiconductors.”
“It is likely that widespread use of export controls could exacerbate microchip supply chain issues, which are already a major concern of governments and policy makers around the world because of the spill-over effect to other industries” such as the automotive industry, the spokesperson said in a statement.
Analysts do not believe that U.S. officials would view SK Hynix’s efforts to bring an EUV tool into China any differently than earlier efforts by Chinese firms.
“They’re really caught between a Chinese rock and a U.S. hard spot,” said Dan Hutcheson, chief executive officer of VLSIresearch, who added that the rules would likely apply to any chip manufacturing operations in China, foreign or domestically controlled. “Anyone who puts an EUV tool in China gives China the capacity. Once it’s there, you have no idea where it will go after that. The Chinese could always seize it or do whatever they wanted to do.”
European stock markets mostly closed lower
In yesterday’s trading, most European stock markets declined after the release of statistical data, which showed a decline in business activity in the region for the fifth month in a row.
The composite index of the largest companies in the region, Stoxx Europe 600, by market close fell by 0.3% to 441.47 points. Germany’s Dax Index fell by 0.56%; France’s CAC 40 – by 0.67%; Italy’s FTSE MIB – by 0.3% and Spain’s IBEX 35 – by 0.15%. Meanwhile, the British FTSE 100 added 0.15%, thanks to growth in shares of some major companies.
Why are European stock markets falling?
According to final data, the composite purchasing managers’ index (PMI) of the euro area, calculated by S & P Global, in November rose to 47.8 points from 47.3 points a month earlier. The dynamics of the indicator coincided with the preliminary estimate and with the expectations of analysts.
The indicator value below 50 points indicates a reduction in business activity in the sector. The index has remained below that mark for five consecutive months amid an energy and geopolitical crisis in Europe, the acceleration of inflation and rising interest rates, says Trading Economics.
PMI in the euro area services sector in November was 48.5 points, down 0.1 points compared with October. Preliminary data indicated that the indicator remained at the October level of 48.6 points.
Retail sales in the euro area fell 1.8 percent in October compared with the previous month, according to a report from the European Union Statistics Office (Eurostat). Analysts polled by Bloomberg expected on average a decline of 1.7 percent.
Sales of food, beverages and tobacco products in the currency bloc fell 1.5% in October compared with the previous month, with non-food products down 2.1%. Motor fuel sales increased by 0.3%.
Meanwhile, some support to the European market was provided by news about the relaxation of anti-coronavirus restrictions in several major cities in China.
The attention of market participants is gradually shifting to the last meetings of the US Federal Reserve System (Fed) and the European Central Bank (ECB) this year, which will be held next week.
The consensus is that both the U.S. and European Central Banks will slow the pace of key interest rate hikes to 50 basis points. The Fed has raised the rate by 75 bps at the previous four meetings, while the ECB has raised the rate at two meetings.
Earlier we reported that the main European stock indices fell during the trading on December 3.
Stats had a positive effect on the European stock market. European growth stocks
West European stock indexes closed Wednesday’s trading with a confident growth. Traders evaluated the fresh batch of statistics and bought European growth stocks.
What influenced European stocks to high growth?
GDP volume in France rose 0.2% in the third quarter compared to the previous three months, final data from the national statistics institute Insee showed. The final data coincided with a preliminary estimate. Analysts, on average, had not expected a revision, according to a Trading Economics survey. GDP growth slowed from a 0.5% rebound in the second quarter.
Consumer prices in France, harmonized with European Union standards, rose 7.1% year-over-year in November. Insee also reported. The November rate of increase in consumer prices coincided with that of October, and analysts polled by Trading Economics expected inflation to remain at the same level.
Consumer spending in the country collapsed by 2.8% in October compared with the previous month. Analysts polled by Bloomberg expected a more moderate decline of 1 percent. The consensus forecast of experts polled by Trading Economics envisioned a 0.6% decline. The decrease in consumer spending was the maximum since April 2021.
The number of unemployed in Germany increased by 17 thousand in November, according to the Federal Employment Agency of Germany. The rise in the index was marked at the end of the sixth month in a row. Experts interviewed by Bloomberg agency, on average, predicted an increase of 13.5 thousand. Respondents to Trading Economics expected an increase of 13 thousand.
Additional positives for investors in European markets on Wednesday were messages about easing of coronavirus restrictions in a lot of cities in China. Note that Amazon’s stock price is also rising if you are interested in the U.S. stock market.
Earlier, we reported that U.S. stock indices were up 2.2-4.4%.
U.S. stock indices today rose 2.2-4.4%
The U.S. stock indices today closed the trading on Wednesday with the confident growth due to the statements of the Federal Reserve Chairman, Jerome Powell, who confirmed that the U.S. Central Bank could slow down the basic rate rise as early as in December.
Judging by the quotations of futures on the level of the prime rate, U.S. stock market indices expect the Federal Reserve to raise it by 50 basis points (bps) in December – to 4.25-4.5%. The U.S. Central Bank has increased the rate by 75 bps at each of the previous four meetings. Against this background, the current stock price of Facebook also rose.
The report by the industry organization ADP, published on Wednesday, showed a slowdown in job growth in the U.S. private sector. Their number increased by 127,000 in November, the lowest rate since January, said the ADP. Analysts polled by The Wall Street Journal on average had forecast job growth of 190,000 after a jump of 239,000 in October.
Data from the U.S. Commerce Department, also released Nov. 30, showed higher-than-reported growth in the U.S. economy in the third quarter. U.S. GDP grew at an annualized rate of 2.9% in the July-September quarter, rather than the previously reported 2.6%. Experts polled by Trading Economics had expected an average revision of 2.7%.
Also, the Federal Reserve released its regional Beige Book survey Wednesday, showing that economic activity in the United States was little changed in the fall.
Federal Reserve banks in five counties reported a weak increase in activity in October and November, while the other seven reported a stable or slightly declining economy.
The Dow Jones Industrial Average index was up 737.24 points (2.18%) at 34589.77 as of Wednesday’s market close.
Standard & Poor’s 500 rose 122.48 points (3.09%) to 4,080.11 points.
The Nasdaq Composite added 484.22 points (4.41%) to 1,468.
All three U.S. stock market indices closed November, with the Dow Jones gaining 5.3%; the S&P 500 gaining 4.6%, and the Nasdaq Composite gaining 3.3%.
Earlier we reported that Main European stock indices were rising during trading.
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