Samsung and SK Fear End of China Semiconductor Equipment Regulation Exemption... "Closely Monitoring Situation"

US Deputy Secretary of Commerce, "Production Limits" After 1-Year Grace Period
Korean Industry: "Not an Official US Position, Not Targeting Allies"

The United States is intensifying pressure related to semiconductor equipment export restrictions against China. The U.S. Department of Commerce has stated its intention to prevent China from producing semiconductors above a certain technological level. The domestic semiconductor industry, which falls under the scope of these regulations, has expressed its intention to cooperate with the government to respond to future developments.

On the 23rd (local time), local media including The Wall Street Journal (WSJ) reported that Alan Estevez, U.S. Deputy Secretary of Commerce (responsible for Industry and Security), attended the Korea-U.S. Economic Security Forum held in Washington D.C. and disclosed plans regarding semiconductor equipment export restrictions to China.

White House in the United States [Image source=Pixabay]

Deputy Secretary Estevez said that after the one-year grace period initially provided alongside the export restrictions has passed, "we are consulting with companies on how to proceed going forward." He also explained, "There is a high possibility of placing a cap on the level of semiconductors that companies can produce," adding, "Production will be stopped at a certain level."

Previously, in October last year, the U.S. blocked exports of equipment used to produce 18-nanometer (nm; 1 nm is one billionth of a meter) DRAM, 128-layer or higher NAND, and logic semiconductors below 14 nm to China. This was to prevent advanced semiconductor production locally. However, the U.S. granted a one-year exemption from these regulations to certain companies with production facilities in China, such as Samsung Electronics, SK Hynix, and Taiwan's TSMC.

The domestic semiconductor industry is taking a cautious stance upon hearing the foreign media reports. An industry official said, "It seems too early to make a judgment on the matter immediately," and "Since this is not an official position of the U.S. government, we intend to monitor the situation."

Within the industry, there is also an interpretation that since Deputy Secretary Estevez's remarks are primarily aimed at containing China, they may not be intended as pressure on allied countries. In fact, Deputy Secretary Estevez stated at the forum, "We do not want to harm our allied companies in the process of containing China," and "We are continuing dialogue with (South Korea) regarding this."

Meanwhile, the U.S. continues to pressure China through the Chips Act. The Chips Act, which came into effect in August last year, provides subsidies and tax credits to companies building semiconductor production facilities in the U.S. However, it includes a guardrail provision that prohibits companies receiving subsidies from investing in China and other countries of concern for ten years.

The U.S. Department of Commerce plans to start accepting applications for Chips Act subsidies from the 28th. Detailed provisions of the law, including the guardrail clause, will be announced soon. If Samsung Electronics and SK Hynix receive subsidies, they may face difficulties operating their businesses in China. The government has stated its intention to continue negotiations with the U.S. to prevent damage to domestic companies in the future.

Samsung Electronics and SK Hynix have semiconductor factories in China. Samsung Electronics operates NAND flash and semiconductor packaging factories in Xi'an and Suzhou, respectively. SK Hynix has DRAM and back-end process factories in Wuxi and Chongqing, and a NAND factory acquired from Intel in Dalian. Samsung Electronics produces 40% of its total NAND output in China, while SK Hynix produces 50% of its total DRAM output there.

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