U.S. Chipmaker KLA To Stop Sales, Services In China

US chip toolmaker KLA Corp. will cease offering some supplies and services from Wednesday, Oct. 12, 2022, to China-based customers including South Korea's SK Hynix in compliance with recent US regulations, a source familiar with the situation said on Tuesday, Josh Horwitz and Joyce Lee reported for Reuters.

Photo Insert: The company will also cease supplying China chip plants owned by Intel and SK Hynix, the world's second-largest memory chipmaker.

The move underscores huge business headwinds facing chipmakers and chip equipment makers around the world, as the Biden administration published a sweeping set of export controls on Friday aimed at slowing China's progress in advanced chip manufacturing.

China is KLA's largest geographic market, bringing in $2.66 billion in sales, or nearly 30% of its total revenue in the last fiscal year that ended in June, according to the company's financial filings.

Under new US regulations released on Friday, 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 staff in China received an email from KLA's legal department stating that effective 11:59 p.m. local time (1559 GMT) on Tuesday, the company shall stop sales and service to "advanced fabs" in China for the technology of NAND chips with 128 layers or more, and DRAM chips 18 nanometer and below, and advanced logic chips.

"Our top management team has told us to relax for a couple of months," the source who was briefed on the matter told Reuters.

The source added that the company would also cease supplying China chip plants owned by Intel and SK Hynix, the world's second-largest memory chipmaker.

Reuters previously reported 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.

China's two leading memory chipmakers - Yangtze Memory Technologies Co. Ltd., Changxin Memory Technologies Inc. - and contract chipmaker Semiconductor Manufacturing International Corp (SMIC) are among the major customers affected by the US export control.

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