Hynix's Dalian in China and TSMC's Nanjing Factory Also... 1-Year Grace Period for US Semiconductor Equipment Export Controls (Comprehensive)

"US Actively Working to Avoid Impact on Semiconductor Companies Outside China"

President Joe Biden [Photo by AP News]

[Asia Economy Reporters Kim Pyeonghwa and Jeong Hyeonjin] SK Hynix's Dalian plant in China, acquired from Intel, has been exempted from U.S. semiconductor equipment export regulations for one year. As a result, all semiconductor plants operated by SK Hynix are free from U.S. regulations for one year.

Along with domestic semiconductor companies such as Samsung Electronics and SK Hynix, Taiwan's foundry (semiconductor contract manufacturing) company TSMC has also received a one-year grace period from the U.S. on semiconductor export controls to China.

On the 12th (local time), Intel announced on its official Twitter account, "On the 11th, we received approval from the U.S. Department of Commerce to continue our NAND business in Dalian, China, for one year." The U.S. had banned semiconductor equipment exports to China on the 7th, but Intel explained that it can operate its business for one year exempt from these regulations.

The SK Hynix NAND plant operated by Intel will also be eligible for the same exemption. Previously, in October 2020, Intel sold its NAND business unit in Dalian, China, to SK Hynix. SK Hynix received approval for the acquisition of Intel's NAND business in China in December last year and completed the first phase of the acquisition.

[Image source=Yonhap News]

The first payment for the acquisition was $7 billion, covering the solid-state drive (SSD) business and assets of the Dalian NAND plant. The second payment of $2 billion is scheduled for around March 2025. Currently, Intel is operating the plant, and once all acquisitions are completed, SK Hynix will take over the Dalian plant's workforce and all assets.

With this, SK Hynix is exempt from U.S. regulations for one year at all semiconductor plants it operates in China. Earlier, on the 11th, SK Hynix announced that it had been notified by the U.S. Department of Commerce of a policy allowing the supply of equipment necessary for semiconductor production facilities in China for one year without separate approval. Besides the Dalian NAND plant, SK Hynix also has DRAM and packaging plants in Wuxi and Chongqing, China, respectively.

An SK Hynix official commented on the regulatory relief, saying, "We have cooperated amicably with the U.S. to continue semiconductor production in China," and added, "Going forward, we will continue to work closely with our government and the U.S. Department of Commerce to operate our Chinese plants within the scope of international order compliance."

Following news that domestic semiconductor companies such as Samsung Electronics and SK Hynix received a one-year grace period from the U.S. Department of Commerce, Nikkei Asia reported on the 13th, citing sources, that TSMC, the leading foundry company with many U.S. clients, also received the same measure. TSMC owns a semiconductor plant in Nanjing, China, and this means that for the next year, there will be no issues in introducing semiconductor equipment there.

[Image source=Reuters Yonhap News]

A major foreign media outlet reported, citing sources, that the U.S. is actively working to prevent unintended consequences that could disrupt the semiconductor supply chain due to new export controls targeting China's semiconductor industry. The grace period was granted to avoid impacting semiconductor companies outside China.

One source described this measure as a temporary action applied until the U.S. government establishes a long-term plan. The source said, "If the approval had not been granted, many pieces of equipment would have required personnel to be withdrawn from factories in China."

Meanwhile, reports have emerged that major semiconductor equipment companies such as KLA, Lam Research, and ASML have begun withdrawing dispatched personnel and suspending support services for equipment at China's leading memory semiconductor company Yangtze Memory Technologies Co. (YMTC). Generally, semiconductor equipment companies assign their personnel to major client factories to manage equipment and respond to issues. If these personnel no longer remain on-site, clients like YMTC will inevitably face difficulties in equipment upgrades, maintenance, and applying new technologies.

Earlier, on the 7th, the U.S. Department of Commerce announced controls on exports to China of equipment related to DRAM below 18 nanometers (nm; 1 nm = one billionth of a meter), NAND flash with 128 layers or more, and logic semiconductors below 14 nm. In this process, multinational companies such as Samsung Electronics and SK Hynix, which have semiconductor plants in China, were allowed to receive equipment supplies through individual permits. The domestic government and related companies reportedly expressed concerns to the U.S. government that such measures could lead to a global semiconductor supply shortage.

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