Korea Submits Opinions on Semiconductor Act to US... Including Samsung and Hynix (Comprehensive)

Government Submits Semiconductor Support Act Comments to US Department of Commerce
Korea Semiconductor Industry Association Collects Industry Opinions and Makes Requests
Samsung Electronics Also Submits Additional Comments Requesting Terminology Improvements

The South Korean government and the semiconductor industry have submitted an official opinion to the U.S. Department of Commerce containing measures to minimize damage to Korean companies under the guardrail provisions of the U.S. CHIPS Act. The request includes doubling the scope within which Korean companies eligible for U.S. semiconductor subsidies can expand semiconductor production capacity in China and minimizing excessive demands for the submission of materials that could compromise trade secrets.

On the 23rd (local time), the U.S. government announced through the Federal Register that it had received the South Korean government's official opinion on the detailed regulations of the semiconductor guardrail provisions, which were disclosed in March. In the publicly posted version of the opinion, the South Korean government stated that "the guardrail provisions should not be implemented in a way that imposes undue burdens on companies investing in the United States."

The South Korean government requested a review of the existing definitions of key terms such as "substantial expansion" and "legacy semiconductors" as outlined in the regulations proposed by the U.S. government. It also asked for clarification on the scope of activities restricted by the "technology recapture" clause, which requires the return of subsidies if joint research or technology licensing agreements (patent use contracts) are made with Chinese companies of concern.

Inside view of the Pyeongtaek campus line where Samsung Electronics semiconductor factory is located /
[Photo by Samsung Electronics] [Image source=Yonhap News]

In this regard, the semiconductor industry believes that the South Korean government has requested to increase the scope of "substantial expansion" for advanced semiconductors from the existing 5% to double that, 10%.

The U.S. government has stipulated in the guardrail regulations that companies receiving subsidies must return the full amount if they engage in significant transactions that substantially expand semiconductor production capacity in countries of concern such as China for 10 years thereafter. Advanced semiconductors cannot be expanded beyond 5%, and previous generation legacy semiconductors cannot exceed 10%. The U.S. Department of Commerce defines legacy semiconductors as follows: logic (system) semiconductors at 28 nm (nanometers, one billionth of a meter) or larger, DRAM exceeding 18 nm, and NAND flash with fewer than 128 layers.

If the South Korean side's request is accepted, Samsung Electronics and SK Hynix, which operate businesses in China, will be able to produce more semiconductors in China even while receiving U.S. government subsidies.

The domestic semiconductor industry also submitted an opinion. The Korea Semiconductor Industry Association gathered industry opinions and requested the removal of patent licensing agreements from the technology recapture clause. They explained that blocking patent licensing agreements with countries of concern could disrupt routine business transactions and strategically disadvantage companies receiving subsidies. They also argued for allowing joint research activities with countries of concern based on contracts concluded before the subsidy was granted.

They further stated that the vague definition of "foreign entities of concern" should be narrowed to companies on export control lists. The opinion also included a request to minimize the compromise of corporate trade secrets caused by the submission of sensitive materials required during subsidy review by the U.S. government. They added a request for the signing of nondisclosure agreements (NDAs) with companies.

Samsung Electronics and SK Hynix submitted additional opinions. Samsung Electronics proposed that the Department of Commerce clarify or revise some terms related to the subsidy recapture clause. Although the Federal Register did not include specific details, SK Hynix has submitted an opinion containing multiple requests.

An industry official said, "Since there were significant concerns when the guardrail provisions were announced, if the domestic opinions submitted this time are reflected, the uncertainty surrounding business in China will be somewhat alleviated. Not only South Korea but also various semiconductor organizations and other companies such as Taiwan's TSMC have submitted opinions, so we plan to observe the future results."

The U.S. Department of Commerce closed the submission of opinions the day before. It 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.