The U.S. Commerce Department is investigating whether Ronda Korea, a South Korean company, has been selling chipmaking equipment to Chinese firms. U.S.-based Lam Research produces the equipment, which was reportedly procured by Chinese companies subject to U.S. sanctions, reports The Information. The probe somewhat mimics another DoC investigation exploring shipments of Applied Materials tools to Chinese entities via South Korea.

The U.S. DoC is specifically examining whether Ronda Korea resold components for chipmaking equipment made by Lam Research to Chinese entities. Lam Research told The Information that Ronda Korea is not an authorized supplier and is cooperating with the Commerce Department to comply with export restrictions to China. Ronda Korea has not commented on the matter, and the Commerce Department has not disclosed specific details about the investigation.

This investigation is part of a larger effort to enforce export controls and prevent sanctioned Chinese firms — particularly Huawei, Semiconductor Manufacturing International Corp., and Yangtze Memory Technologies Co. — from obtaining advanced wafer fab tools. The U.S. DoC is also looking into other South Korean companies that might supply sanctioned Chinese companies with advanced wafer fab tools.

Due to these tighter export restrictions, Chinese chipmakers have faced increasing difficulties in obtaining necessary components and equipment. The U.S., the Netherlands, and Japan have imposed stringent controls to block China’s access to logic technologies below 14nm/16nm, DRAM production nodes beyond 18nm, and 3D NAND with more than 128 active layers. Despite these efforts, South Korean companies have emerged as alternative suppliers, helping to keep Chinese fabs operational.

Unlike the U.S., Japan, and the Netherlands, South Korea has not imposed strict Chinese export rules on wafer fab tools, which made it a key player in the semiconductor supply chain to China. Ronda Korea has been expanding its operations in China, establishing three subsidiaries in 2023.

However, the U.S. has been urging South Korea to restrict these exports since March, adding pressure on South Korean authorities and companies. The outcome of this probe could influence other South Korean companies and prevent the re-export of advanced fab tools to Huawei, SMIC, YMTC, and other entities from China. However, this situation poses a risk of retaliation from China, which could impact South Korea’s significant trade relations with the country.