Samsung Electronics and SK Hynix are evaluating chipmaking equipment from China's Advanced Micro-Fabrication Equipment (AMEC) for possible use at their Chinese factories, three people familiar with the matter said, as the South Korean firms hedge against the risk of tighter U.S. export controls.
The memory chipmakers began testing AMEC etching equipment about two years ago, when uncertainty was mounting over whether Washington would continue allowing them to import U.S. chipmaking tools into China, two of the sources said.
While the evaluations have yet to result in decisions on wider deployment, they offer the Shanghai-based company a rare chance to secure validation from some of the world's leading chipmakers.
More broadly, the trials underscore a paradox at the heart of U.S. technology controls: measures designed to constrain Beijing's semiconductor ambitions are creating opportunities for Chinese rivals to gain a foothold in foreign-owned fabs operating in China.
All sources declined to be identified due to the sensitivity of the matter.
TIGHTENING EXPORT CONTROLS
The U.S. Commerce Department designated Samsung and SK Hynix's Chinese factories as "validated end users" (VEU) in 2023, allowing imports of certain controlled U.S. equipment without obtaining individual licences.
Washington revoked the VEU authorization in 2025 and later granted an annual license to the chipmakers to bring in chip manufacturing equipment to their facilities in China for 2026.
Even so, both companies remain wary that future restrictions could extend beyond new equipment to the servicing, repair or replacement of Western tools already installed at their Chinese plants, the sources said.
As a result, the chipmakers are keeping Chinese suppliers in reserve as a potential way to maintain and upgrade existing production lines, rather than expand manufacturing capacity in China, the sources added.
Samsung operates its NAND flash memory chip plant in Xian, and SK Hynix has NAND facilities in Dalian and a DRAM memory chip plant in Wuxi.
Their China factories rely heavily on etching tools supplied by U.S. firms including Applied Materials (AMAT.O) and Lam Research (LRCX.O).
STAMP OF APPROVAL
For AMEC and China's emerging crop of semiconductor-equipment makers, winning approval from Samsung or SK Hynix would amount to a powerful commercial endorsement.
While Chinese equipment makers continue to trail overseas rivals in advanced lithography and some inspection systems, they have narrowed the gap in areas such as etching, deposition, cleaning and planarisation, often at significantly lower cost.
Chinese tools can cost 20% to 30% less than comparable equipment from established foreign suppliers, according to Dan Hutcheson, vice chair of research firm TechInsights.
AMEC equipment is already used by leading Chinese chipmakers, including NAND producer Yangtze Memory Technologies Co (YMTC), giving Samsung and SK Hynix greater confidence that some systems are mature enough for testing, the sources said.
The rise of Chinese suppliers could pose a longer-term challenge to dominant equipment makers including Applied Materials, Lam Research and KLA (KLAC.O), as well as Japanese and European rivals that have long controlled key segments of the wafer-fabrication market.
China remains an important market for those companies. Applied Materials reported $8.53 billion in China revenue in fiscal 2025, equal to 30% of total sales.
Any breakthrough for Chinese suppliers would still face hurdles, including lengthy qualification processes, smaller service networks, intellectual-property concerns and potential political pressure from Washington.
It is also unclear whether Korean chipmakers would install Chinese equipment at domestic factories because of security and intellectual-property risks.
Yet U.S. export controls have helped create a fertile opening for China's equipment industry. Deutsche Bank estimates that Naura Technology (002371.SZ), AMEC, Piotech and ACM Research will each generate more than $1 billion in revenue in 2026.
Together, they could capture 25% to 30% of China's projected $28 billion wafer-fabrication equipment market this year, the bank estimated. Excluding lithography and metrology, Chinese suppliers' share could approach 40%.
