Chinese firms stockpile HBM chips amid US export restrictions

Chinese tech giants, including Huawei and Baidu, and startups are stockpiling high bandwidth memory (HBM) semiconductors from Samsung Electronics in anticipation of potential US export restrictions. The ramped-up purchasing began earlier this year, with China accounting for about 30% of Samsung’s HBM chip revenue in the first half of 2024. This strategic plan reflects China’s efforts to maintain its technological ambitions amid increasing trade tensions with the US and other Western nations, impacting the global semiconductor supply chain.

US authorities will soon announce an export control package, including new shipment restrictions to China’s semiconductor industry. The new package of measures will likely detail limits on access to HBM chips, although specific details and potential impacts remain unclear.

HBM chips are essential for developing advanced processors, such as Nvidia’s graphics processing units, used for generative AI since only three bigger chipmakers, SK Hynix, Samsung, and US-based Micron Technology, produce these kinds of chips.

Chinese demand has focused on the HBM2E model, two generations behind the latest HBM3E. Due to the global AI boom, the advanced model is in short supply. Chinese companies, from satellite manufacturers to tech firms like Tencent, have purchased these chips. Huawei has used Samsung’s HBM2E semiconductors for its advanced Ascend AI chip, and other firms like Hawking have also placed orders.

While Chinese firms like Huawei and CXMT are making progress in developing HBM2 chips, their efforts could be hindered by the new US restrictions. Samsung may face a major impact from these restrictions compared to its rivals, as it relies more on the Chinese market. SK Hynix, focusing on advanced HBM chip production, has nearly sold out its HBM chips for the next two years, while Micron has already stopped selling its HBM products to China since last year.