President’s Office “Notification of final decision by U.S. government”
Equipment export control virtually indefinitely suspended
The United States has finally notified the Korean government of its policy to virtually indefinitely suspend restrictions on the import of American semiconductor equipment for Chinese factories operated by Samsung Electronics and SK Hynix. Uncertainty about investing in popular semiconductors has decreased. However, analysts say that business risks in China remain as other U.S. regulations related to semiconductors remain.
Choi Sang-mok, Senior Secretary to the President for Economic Affairs, said at a briefing in the Yongsan Presidential Office on the 9th, “The U.S. government has designated Samsung Electronics and SK Hynix’s semiconductor factories in China as ‘verified end users (VEUs)’ in accordance with U.S. export control regulations, so there will be no separate permitting process in the future. “We have communicated our final decision to supply American equipment without a time limit,” he said. VEU is a comprehensive licensing system that allows the export of designated items only to companies that have received prior U.S. approval, meaning that the application of export controls is effectively suspended indefinitely. Samsung Electronics and SK Hynix’s one-year suspension of export controls for popular semiconductor technology and equipment was scheduled to end on the 11th.
U.S. semiconductor law guardrail regulations remain
Samsung Electronics and SK Hynix will continue to be allowed to import semiconductor equipment into their Chinese factories, giving these companies some breathing room. This makes it possible to carry out the minimum repairs and upgrades necessary to maintain the competitiveness of existing facilities and locally produced products.
A Samsung Electronics official said, “Through close consultation between governments of each country, much of the uncertainty about China’s production lines has been resolved,” and added, “We will do our best to stabilize the global semiconductor supply chain.” SK Hynix also said, “We are deeply grateful for the efforts of the Korean and American governments,” and “We will faithfully comply with the laws of each country and do our best for the development of the global semiconductor industry.”
Bringing in new equipment into the Chinese factory was an urgent issue. Even in facilities that have already been built, new equipment is necessary due to equipment aging. In addition, while process upgrades were delayed due to various regulations and uncertainties, existing products continued to lag behind the latest products. An official in the semiconductor industry said, “There was a desperate need to improve the performance of products currently produced in China, but now that we have room for some improvements, we can operate the factory for at least 4 to 5 more years.”
However, not all uncertainties have been resolved. The so-called ‘guardrail’ regulations for companies supporting the US ‘CHIPS Act’ are still in progress. According to the final guardrail plan, companies receiving subsidies from the U.S. government can only expand their production facilities in China by less than 5% over 10 years. Production of older generation general-purpose semiconductors with lower performance can be expanded by less than 10%.
As technology competition between the United States and China intensifies, there is a possibility that the U.S. government will pull out another regulatory card. A semiconductor industry official predicted, “Uncertainties and risks regarding large-scale facility upgrades and cutting-edge semiconductor production in China will continue in the future.”
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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.