According to an unnamed industry source, there is uncertainty surrounding what will happen when the one-year waiver for Samsung and SK Hynix to receive chip equipment needed in China expires in October. Both companies have said they will review the details of the announcement. However, South Korea’s trade ministry noted that Samsung’s plan to invest $230 billion in South Korea over 20 years to develop a large chip-making base is in line with uncertainties in investing in China or the United States. The proposed US rules to prevent $52 billion in chip funding from being used by “countries of concern” will not require recipients to shut down their China factories. The proposed rules limit chip production capacity growth in China to 5% over ten years, measured by wafers, and 10% for older legacy chips. Samsung Electronics and SK Hynix have chip production facilities in China.
South Korea’s trade ministry announced on March 22, 2023, that the proposed US rules to prevent $52 billion in chip funding from being used by “countries of concern” will not require recipients to shut down their China factories. The US Commerce Department has proposed limits for recipients of US chip manufacturing and research funding, including restrictions on investing in expansion in countries like China and Russia. The proposed rules for funding recipients limit chip production capacity growth in China to 5% over ten years, measured by wafers, and 10% for older legacy chips. However, they do not restrict investments in technology and process upgrades, or equipment replacement necessary for the operation of existing facilities, the ministry added.
Samsung Electronics and SK Hynix, the world’s largest and second-largest memory-chip makers, respectively, have chip production facilities in China. Samsung is currently building a chip plant in Texas that may cost more than $25 billion, while SK Hynix parent SK Group announced last year plans to invest $15 billion in the US chip industry. Both companies may apply for funding.
The trade ministry’s statement also said that “for production facilities our companies are operating in China, it is expected that maintenance and partial expansion as well as technology upgrades will continue to be possible.” The ministry added that “as technology is upgraded, chips per wafer can be increased… which could further expand production depending on corporate strategies.”
The South Korean government plans to communicate with the local industry, analyze proposed rules, and consult with US counterparts within 60 days, according to the ministry.
According to an unnamed industry source, there is uncertainty surrounding what will happen when the one-year waiver for Samsung and SK Hynix to receive chip equipment needed in China expires in October. Both companies have said they will review the details of the announcement. However, South Korea’s trade ministry noted that Samsung’s plan to invest $230 billion in South Korea over 20 years to develop a large chip-making base is in line with uncertainties in investing in China or the United States. The report was by Joyce Lee and edited by Gerry Doyle.
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