[ad_1]
Washington has signaled that it will allow South Korea’s major chip companies to export US chip-making equipment to China, a key move for the United Nations to curb Beijing’s access to advanced semiconductors.
The Biden administration in October granted Samsung Electronics and SK Hynix, two of the world’s leading makers of memory chips, a one-year reprieve from export controls aimed at reducing China’s capacity to produce high-quality chips.
The U.S. now has a clear message to Korean manufacturers that another amnesty for their factories in China will take at least a year, according to four people familiar with the situation.
After Washington imposed export controls last year, U.S. and South Korean officials have held heated discussions over how and under what conditions chipmakers will continue to operate in China. Samsung and SK Hynix rely partly on American equipment for their operations in China.
It is not clear exactly what mechanism the US will use to continue moving US equipment to China. One option is to provide companies with an open “verified end-use” certificate, which eliminates the need for repeated licensing.
Despite the exemption, South Korean chipmakers will not be able to import the extreme ultraviolet (EUV) machines needed to produce the world’s most advanced memory chips.
The withdrawal decision, which was not formally endorsed by the Biden administration, underscores the difficulties the United States faces in trying to enlist countries such as South Korea, Japan and the Netherlands — whose equipment makers are crucial in the global chip. Supply chain – to slow China’s efforts to protect advanced semiconductors, even if it does not harm its partners’ economic interests.
President Joe Biden last week dismissed criticism that his China-related export controls were hurting South Korea. “It’s creating jobs in South Korea, and not just with SK. [Group] but . . . With Samsung,” Biden said at a joint press conference with South Korean President Yun Suk-yeol, who is on a four-day visit to Washington. “It’s a win-win.”
Extending the one-year amnesty would effectively help Korean companies maintain a technological edge over their Chinese rivals, among other measures under discussion, according to several people familiar with the discussions. That would benefit their Chinese competitors and help address disruptions to their Chinese operations.
Kim Young-peng, a researcher at the Korea Institute of Industrial Economics and Trade, said: “If the suspension is not extended, it will disrupt their chip production in China.” “For example, if chip manufacturing equipment breaks down, certain parts need to be replaced, but if you can’t renew the release, that’s not possible.”
The semiconductor industry accounts for 20 percent of South Korea’s exports. Samsung’s semiconductor business posted a $3.4 billion loss on Thursday last week, amid a sharp decline in the global memory chip sector.
The FT reported last year that Samsung and SK Hynix are reassessing their investments in China because of the US Chip and Science Act, which provides billions of dollars in subsidies to chipmakers, vowing not to expand facilities in China.
Korean officials were angered by several of Washington’s demands. The FT recently reported that the White House has asked South Korea to prevent its chipmakers from filling a market gap in China if Beijing bans US rival Micron from selling chips. Beijing is conducting a national security review of an Idaho-based memory chip maker.
The U.S. Commerce Department and Samsung Electronics declined to comment. SK Hynix said in a statement: “Discussions between the US and the Korean government are still ongoing, so we are unable to comment.”
Additional reporting by Song Jung-a in Seoul
[ad_2]
Source link
