China Investigating Samsung, Other Foreign Chipmakers

China opened an investigation into Samsung Electronics, Micron Technology, and SK Hynix earlier this spring, having opted to probe the world's largest manufacturers of DRAM chips, The Wall Street Journal reports. Beijing's regulators have recently visited the Chinese offices of all three companies but the reason behind the inquiry remains unclear. The trio confirmed an investigation is ongoing but hasn't elaborated on the matter, having only said they're fully cooperating with local authorities. The development comes shortly after calls for domestic chipmaking investments became more prominent throughout the Far Eastern country, with advocates pointing to the example of ZTE as one of the main reasons why China should reduce its reliance on semiconductor imports. ZTE, one of the world's largest smartphone and telecom equipment manufacturers, is presently crippled due to a U.S. denial order preventing it from purchasing Qualcomm's chips, among other technologies.

Mark Newman of Bernstein believes Chinese authorities may be looking into the three firms due to the rising DRAM chip costs in the country. Beijing could be probing potential price fixing or pressure the targeted companies into sharing their proprietary technologies with local players, the analyst suggested. China remains the world's largest importer of semiconductor solutions, with close to 90-percent of its chip market amounting to foreign manufacturers. Dynamic random access memory modules are used in a broad range of products, including smartphones, with their global prices being on the rise since 2016 as demand continues to outpace supply.

While numerous firms from the country are presently trying to establish large-scale DRAM manufacturing operations, China still lacks a company whose production capabilities are anywhere close to those of South Korea's semiconductor firms or the Boise, Idaho-based corporation its officials are now investigating. Samsung's explosive growth recorded over the last several years is largely being attributed to the rising prices of DRAM and NAND chips which significantly improved its profit margins.

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