US Semiconductor Association: "Allied Countries Must Also Join Export Controls Against China"

The U.S. semiconductor equipment industry has expressed the opinion that allied countries, including South Korea, should be subject to the same level of comprehensive regulations as those imposed on exports to China. Domestically, while there is an interpretation that such moves are likely aimed at Japan, the actual competitor of the U.S., the industry is closely monitoring future developments.

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According to the U.S. government gazette on the 31st (local time), the Semiconductor Industry Association (SIA) submitted a statement to the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) on the 17th, arguing that the U.S. government's semiconductor equipment export controls are more complex and comprehensive than those applied to allied countries, putting U.S. companies at a disadvantage in market competition. The SIA explained, "Competitors from Japan, South Korea, Taiwan, Israel, and the Netherlands can export equipment not subject to list-based export controls to advanced semiconductor factories in China." In contrast, U.S. companies cannot export related equipment or provide related services if the equipment is used for advanced semiconductor manufacturing, even if it is not subject to export controls, which puts them at a competitive disadvantage.

The SIA claimed that this situation will ultimately weaken the competitiveness of the U.S. semiconductor industry. It also demanded that the U.S. government persuade allied countries to introduce similar export controls. The solution should be found by having the U.S. and its allies control the same items and establish the same licensing procedures. Individual U.S. companies have also submitted opinions, stating that equal regulations between U.S. companies and their competitors are necessary.

There is a response that the impact of such claims by the U.S. industry on the domestic semiconductor industry will not be significant. An industry official said, "This is just an opinion from the U.S. industry, and no actual policy has been announced yet, so it is unclear which direction this will take," adding, "Although they spoke broadly about allied countries, in reality, the targets are likely competitors such as Japan rather than South Korea."

The global semiconductor equipment market is currently dominated by the U.S. and Japan. According to the 2022 top 10 list released by semiconductor market research firm TechInsights, the rankings included ▲U.S. Applied Materials (AMAT) ▲Netherlands ASML ▲U.S. Lam Research ▲Japan Tokyo Electron (TEL) ▲U.S. KLA ▲Japan Advantest ▲Japan Screen Holdings ▲Netherlands ASM ▲Japan Kokusai Electric ▲U.S. Teradyne, with the U.S. (4 companies) and Japan (4 companies) accounting for the majority.

Currently, semiconductor equipment companies from the U.S. and Japan are expanding their presence in the global market by leveraging advanced technological capabilities. China is also a major market for these companies. For AMAT, China accounted for 27% of total sales in fiscal year 2023, with a 44% share in the fourth quarter of that year. TEL also counts China as its largest revenue source among global regions, with China accounting for around 40% of total sales, though quarterly figures vary.

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In South Korea, there are equipment manufacturers that have recently improved their technological capabilities and achieved results, but they have yet to stand out in the equipment sectors dominated by U.S. and Japanese companies. Even if equipment is manufactured domestically, it sometimes uses U.S. technology, placing it under U.S. regulatory jurisdiction. The U.S. restricts exports of its technology and related equipment to prevent advanced semiconductor production in China. Equipment produced using U.S. technology is subject to regulation, even if it is domestic equipment.

Kim Yang-peng, a senior researcher at the Korea Institute for Industrial Economics and Trade, said, "Japan is imposing sanctions on China in line with U.S. demands, but since it continues to export in many areas, this issue may have arisen," adding, "Even if the U.S. government partially adjusts controls according to industry demands, our companies have competitiveness in fields other than those dominated by U.S. companies, so it is actually those competing with U.S. companies who may suffer."

An Ki-hyun, Executive Director of the Korea Semiconductor Industry Association, also explained, "Besides the U.S., Japan and the Netherlands have developed semiconductor equipment industries, but since the Netherlands operates a monopoly business, the real competitor to the U.S. is Japan," adding, "Since a lot of Japanese equipment goes to China, if the U.S. introduces additional regulatory measures, it could be affected."

Some interpret that U.S. semiconductor equipment companies indirectly expressed dissatisfaction due to difficulties caused by excessive government regulations. Another industry official said, "The U.S. government cannot realistically demand the same level of regulation from all allied countries, so the companies’ statements may actually be a way to express dissatisfaction with their own government," adding, "They probably could not openly ask to export to their main markets, so they expressed it in another way."

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