The United States has decided to allow exports of its semiconductor manufacturing equipment to Samsung Electronics and SK Hynix factories in China without a separate approval process, clearing uncertainties over their chip production in China, which partly relies on US equipment, reported Yonhap News Agency on October 9.
TSMC's one-year waiver is going to expire on October 13. Since the two South Korean semiconductor plants have received an indefinite waiver, TSMC should also be able to get the same treatment, if there is no surprise.
The report quotes a statement from the presidential office of South Korea that the US government has already notified the two South Korean companies of its decision, which takes effect immediately. During a briefing, Choi Sang-mok, South Korea's senior presidential secretary for economic affairs, said the most significant trade issue of South Korean semiconductor companies has been resolved.
Samsung and SK Hynix's factories in China are designated by the US government as "verified end users (VEU)," which do not need to apply for licenses from the Department of Commerce to let US exporters ship designated items.
Reuters calls the move "a much-needed relief to the Korean chipmakers". Samsung produces about 40% of its NAND flash memory in its Xi'an plant, while SK Hynix produces 40% of its DRAM wafers in Wuxi of Jiangsu Province and 20% of its NAND flash memory in its Dalian plant.
SK Hynix said in a statement that it welcomes the US government's decision to extend the waiver of export control regulations. The company believes that this decision will contribute to the stabilization of the global semiconductor supply chain.
Meanwhile, Samsung responded that through close coordination with the relevant governments, the uncertainty surrounding the operation of Samsung's semiconductor production lines in China has been greatly eliminated. Samsung promises to continue to work closely with all relevant governments to maintain a stable supply chain for the global semiconductor industry.
In October 2022, the US government launched the most comprehensive export control measures in history. In addition to directly cutting off China's semiconductor manufacturers from access to specific US wafer technologies and equipment, Samsung, SK Hynix, and TSMC were also subject to US Department of Commerce control measures, and were granted a one-year waiver.
It is important to note that, since the latest guardrail final rule of the CHIPS Act has limited subsidy recipients' China production line expansion for advanced processing nodes under 5% and mature nodes under 10% over a 10-year period, their operations in China will remain under extreme limitations, and thus will not be able to upgrade to advanced technologies in tandem with their fabs in other regions.
This demonstrates the "small yard, high wall" approach of the Biden Administration to control the semiconductor development in certain regions is still intact.
