US Strengthens Controls on Semiconductor Exports to China... Government Says Domestic Impact Limited

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[Asia Economy Sejong=Reporter Lee Jun-hyung] As the United States strengthens export controls on semiconductors to China, the government stated that the impact of these export controls on the domestic market will not be significant.

According to the Ministry of Trade, Industry and Energy, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced on the 7th (local time) enhanced export control measures on semiconductors and semiconductor manufacturing equipment to China. For semiconductors, all products ultimately used in advanced computing chips and supercomputers above certain specifications are subject to export controls. All products sold to 28 Chinese semiconductor and supercomputer-related companies listed on the U.S. 'Entity List' are also controlled.

Semiconductor equipment used to manufacture DRAM, NAND flash, and others cannot be exported to China without U.S. approval. High-spec deposition equipment newly added to the control list is also restricted from export under the strengthened measures. The U.S. plans to generally deny export licenses for semiconductors and semiconductor equipment to Chinese companies. However, multinational corporations with subsidiaries in China, such as Samsung Electronics, may obtain export licenses through case-by-case reviews.

The Ministry of Trade, Industry and Energy expects the impact of the U.S. export control strengthening on the domestic industry to be limited. First, since advanced computing chips are not produced domestically, there will be no short-term impact. However, there is a possibility that domestic artificial intelligence (AI) companies may face restrictions in entering overseas markets. The ministry explained that the number of supercomputers subject to export controls is very small, so the impact on the domestic market will not be significant.

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The export controls on semiconductor equipment are also unlikely to immediately cause supply disruptions for domestic companies. This is because domestic companies’ production bases operating in China, such as SK Hynix’s Wuxi plant and Samsung Electronics’ Xi’an plant, are classified as 'subject to case-by-case review,' unlike Chinese companies. However, there is a need to minimize uncertainties through consultations with U.S. export control authorities.

The ministry stated that it has minimized domestic impacts from the export control measures through prior consultations with the U.S. In fact, the U.S. introduced a separate exceptional licensing procedure considering the significant role of Korean semiconductor plants in China within the global semiconductor supply chain, at the request of the Korean government. Additionally, the U.S. has committed to ensuring the stable supply of necessary semiconductor equipment so that production at domestic companies’ Chinese plants is not disrupted.

The ministry plans to use the 'Korea-U.S. Supply Chain and Industry Dialogue (SCCD)' export control working group as a regular consultation channel with the U.S. It will hold export control briefings for companies exporting to China and distribute export control guidelines. The ministry also plans to operate an export control desk at the Strategic Materials Management Institute.

An official from the ministry said, "We will actively participate in the U.S. Department of Commerce briefing scheduled for the 13th of this month to further express domestic industry opinions and support authoritative interpretations of related regulations," adding, "We will promptly hold the 'Korea-U.S. Export Control Working Group' to intensively discuss corporate difficulties and other issues."

This content was produced with the assistance of AI translation services.