Announcement of detailed semiconductor law guidelines within this month at the earliest
Restriction on investment in China for 10 years if US aid is received
It is known that the detailed guidelines of the US ‘Semiconductor Act’ will be released as early as this month, and the domestic semiconductor industry has also fallen on fire. This is because the specific direction of the ‘guardrail’ clause, which restricts Chinese investment for 10 years when receiving US support, comes out. Samsung Electronics and SK Hynix rely heavily on China not only for their major customers but also for their factory facilities, so there are concerns that they will be hit hard if they are directly subject to guardrail regulations.
According to the National Assembly and the semiconductor industry on the 12th, the US Department of Commerce is expected to announce detailed guidelines on the Semiconductor Act as early as this month. It is known that specific conditions are currently being discussed between the US government and individual companies. The Korean government is also cooperating closely, such as coordinating at the government level and sharing necessary information with Korean companies.
The Semiconductor Act, signed by US President Joe Biden in August of last year, provides support for subsidies and tax credits in the amount of $52.7 billion (about 67 trillion won) for semiconductor-related investments in the United States. Instead, as a condition of support, it is putting up a guardrail clause that says that it must not invest in a country that threatens the US security, such as China, for 10 years. When each company receives support from the Semiconductor Act, it is obliged to write a contract specifying these details and to report to the Ministry of Commerce if it invests in China or a country of concern.
The Korean government and businesses are expecting that the US will not issue a moratorium. Separately from the Semiconductor Act, the United States previously restricted exports of advanced semiconductor equipment to China and imposed a one-year moratorium on Samsung Electronics and SK Hynix.
However, there are also concerns that the United States will continue to have limitations in giving exceptions to Korean companies given the effectiveness of Chinese regulations. In addition, there is a risk that even if we overcome the hurdle this time, we will have to suffer from uncertainty because it is practically impossible to convert a supply chain that has been established for a long time in one year.
Samsung Electronics is an urgent place right now. Samsung Electronics is building a foundry (semiconductor consignment production) plant in Texas with an investment of 17 billion dollars. As it is important to receive various incentives from the US government to compete with Taiwan’s TSMC, it is inevitable to have deep concerns about the guardrail clause. Although SK Hynix has yet to make any actual investments, it is concerned about the fact that it is preparing to build a new high-tech packaging plant in the US.
Compared to the United States, Japan, and Taiwan, Korea is highly dependent on China and has a large proportion of factories in China. Samsung Electronics operates factories in Xian and Suzhou, China, and SK Hynix operates factories in Wuxi and Dalian.
There are also voices that the Korean government should be more active, such as opening a negotiation channel between the US government and Korean companies. Rep. Yang Hyang-ja stressed, “As the competition between companies over semiconductors escalates into a war between countries, it is imperative for the government to prepare active support measures for Korean companies that are playing on the international stage.”
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.