South Korea’s semiconductor industry faces mounting uncertainty as the U.S. ramps up restrictions on AI chip exports to China. U.S. President Donald Trump’s administration imposed an indefinite ban on exports of Nvidia’s H100 artificial intelligence (AI) accelerator to China on April 15. As Beijing pushes back with retaliatory measures, Washington is responding by tightening export controls on key AI semiconductors.
AI accelerators are chips designed to boost processing speed for AI applications by combining graphics processing units (GPUs) with high-bandwidth memory (HBM). They are essential to data center operations, with Nvidia holding a dominant position in the market. The H20, now added to the export control list, was a mid-range chip specifically developed for the Chinese market after high-end AI accelerators were banned under earlier U.S. sanctions.
South Korea’s SK Hynix and Samsung Electronics supply HBM chips used in the H20. With shipments to China effectively halted, industry watchers warn of inevitable repercussions for Korea. “Global investment in data centers was already expected to slow due to Trump’s tariff war. Now, with H20 exports cut off, Korea’s memory chipmakers are under added pressure,” one expert said.
Nvidia on April 15 said the U.S. government had informed the company it would now need a license to export the H20 to China. Although earlier statements suggested the chip might be exempt, it was ultimately restricted. If the ban remains, Nvidia could face a $5.5 billion loss in its fiscal first quarter (February–April) due to unsold inventory.
The growing stockpile is a major concern for Korean firms. Nvidia shipped around one million H20 units to China last year, generating an estimated $12 billion to $15 billion in sales. This year, shipments were expected to reach 1.3 million units in the first quarter alone, driven by a surge in demand after Chinese AI firm DeepSeek revealed it had trained its models using the H20 ahead of anticipated U.S. export restrictions.
Each H20 chip contains six HBM units, most of which are supplied by SK Hynix and Samsung Electronics. The first-quarter export halt alone affects roughly eight million HBM units, estimated at $1.6 billion in value. While Samsung does not supply HBM for Nvidia’s top-end accelerators like the H100 or Blackwell, it does for the H20. “If Nvidia’s exports to China remain blocked, Korea’s high-margin HBM business will inevitably suffer,” said one industry source. South Korea held a commanding 94.9% share of the global HBM market last year.
China’s move to restrict exports of seven types of rare earths in retaliation to U.S. measures could also impact South Korean companies. These materials are essential for AI servers and smartphones, with China producing 99% of the global supply. While the immediate effect on South Korea is limited, any disruptions in the global supply chain could eventually hit Korean businesses.
Korean firms are also closely watching Trump’s next move on chip tariffs. A sharp increase could raise the cost of AI servers and other hardware, further discouraging corporate investment.
Another challenge is Nvidia’s plan to establish AI chip production in the U.S. to bypass tariff-related risks. The company has partnered with Taiwanese firms such as TSMC and Foxconn, narrowing opportunities for Korean companies to participate in the growing U.S.-based AI semiconductor ecosystem.
