South Korea Urges U.S. Government to Allow Up to 10% Semiconductor Production Increase in China

Government Submits Comments on Semiconductor Law Guardrail Regulations to U.S. Department of Commerce

The South Korean government has requested the U.S. government to double the scope within which Korean companies receiving subsidies under the U.S. CHIPS and Science Act (CSA) can expand their semiconductor production capacity in China.

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According to the U.S. government gazette on the 23rd (local time), the Korean government stated in a letter to the U.S. Department of Commerce that "the guardrail provisions should not be implemented in a way that imposes undue burdens on companies investing in the United States."

This was an official response to the detailed regulations on the semiconductor law’s guardrail provisions released by the U.S. Department of Commerce in March.

The government requested a review of the current definitions of key terms such as "substantial expansion" and "legacy semiconductors" included in the regulations proposed by the U.S. government. It also asked for clearer clarification on the scope of activities restricted by the "technology clawback" provision, which requires repayment of subsidies if joint research or technology licensing agreements are made with Chinese companies of concern.

The government explained, "We will submit detailed opinions to the U.S. government on how these important issues can be resolved," and added, "South Korea requests that the U.S. government actively consider Korea’s views when finalizing the detailed regulations on the guardrail provisions."

The government did not provide specific explanations in the public version regarding the requests to review the definitions of substantial expansion and general-purpose semiconductors. However, it is interpreted as a request to allow Samsung Electronics and SK Hynix to produce more semiconductors in China even while receiving subsidies from the U.S. government.

The U.S. government’s guardrail regulations stipulate that companies receiving subsidies must repay the full amount if they substantially expand semiconductor production capacity in countries of concern such as China within the next 10 years. Advanced semiconductors cannot be expanded by more than 5%, and previous generation legacy semiconductors cannot be expanded by more than 10%. In this regard, the South Korean government is reportedly requesting that the scope of substantial expansion for advanced semiconductors be increased to 10%.

The South Korean government has also requested a relaxation of the standards related to legacy semiconductors. Currently, the Department of Commerce defines legacy semiconductors as ▲logic semiconductors at 28nm (nanometers, one billionth of a meter), ▲DRAM at 18 nanometers, and ▲NAND flash at 128 layers.

Meanwhile, Samsung Electronics, SK Hynix, and the Korea Semiconductor Industry Association also submitted opinions to the U.S. Department of Commerce. Samsung Electronics proposed that the Department clarify or revise some terms related to the subsidy clawback provisions.

The U.S. Department of Commerce closed the comment period the day before and plans to review the related content and announce the finalized regulations within the year.

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