{"id":2200310,"date":"2023-03-02T19:27:06","date_gmt":"2023-03-02T10:27:06","guid":{"rendered":"https:\/\/koreapro.org\/?p=2200310"},"modified":"2023-04-05T16:09:34","modified_gmt":"2023-04-05T07:09:34","slug":"why-south-korea-is-grumbling-about-new-us-chip-restrictions-on-china","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/03\/why-south-korea-is-grumbling-about-new-us-chip-restrictions-on-china\/","title":{"rendered":"Why South Korea is grumbling about new US chip restrictions on China"},"content":{"rendered":"
New U.S. semiconductor restrictions aimed at curtailing Chinese competitiveness may undercut South Korea\u2019s biggest chipmakers.<\/span><\/p>\n A new <\/span>requirement<\/span><\/a> that bars recipients of $53 billion in CHIPS Act subsidies from engaging in \u201ccertain significant transactions\u201d involving expanding chip manufacturing capacity in China, or \u201ccountries of concern,\u201d for 10 years is becoming a friction point between Seoul and Washington.<\/span><\/p>\n While there is little concern about the two allies growing apart under the staunchly <\/span>pro-U.S.<\/span><\/a> Yoon administration, future South Korean governments may push back more strongly against Washington\u2019s semiconductor policies and make the ROK\u2019s <\/span>own chip industry<\/span><\/a> more autonomous.\u00a0<\/span><\/p>\n CHIPS ACT<\/b><\/p>\n Proponents <\/span>initially described<\/span><\/a> the U.S. CHIPS and Science Act as a way to bolster the U.S. semiconductor industry and strengthen supply chains shaken by the COVID-19 pandemic and ensuing semiconductor shortage. But the <\/span>guardrail provision<\/span><\/a>, which ensures no company can use the $39 billion CHIPS funds to \u201cundermine [U.S.] national security,\u201d is proving a sticking point.<\/span><\/p>\n The provision stipulates that any company that receives CHIPS subsidies will have to return the total amount of the award they received if they knowingly engaged in \u201cany joint research or technology licensing effort with a foreign entity of concern that raises national security concerns.\u201d\u00a0<\/span><\/p>\n For ROK semiconductor companies like Samsung Electronics or SK Hynix, that could amount to billions of dollars.<\/span><\/p>\n The law states further that companies that receive U.S. funding must agree not to expand semiconductor manufacturing capacity in \u201ccountries of concern\u201d for 10 years beginning when they receive funding.<\/span><\/p>\n About <\/span>40%<\/span><\/a> of Samsung\u2019s NAND flash memory chips come from its Chinese facility in Xian, while SK Hynix produces 50% of its DRAM and 20 to 30% of its NAND flash memory chips in Wuxi and Dalian, respectively.<\/span><\/p>\n In response to Seoul\u2019s concerns, the U.S. Commerce Department\u2019s <\/span>announcement<\/span><\/a> in October to restrict chip equipment exports to China contained a temporary general license (TGL) clause. It provided a temporary one-year-long relief to Samsung Electronics and SK Hynix \u201cto minimize the short-term impact on the semiconductor supply chain.\u201d<\/span><\/p>\n But on Feb. 24, U.S. undersecretary of commerce for industry and security Alan Estevez <\/span>strongly hinted<\/span><\/a> that the U.S. would not extend that one-year relief period. He also said Washington would likely limit the level of advanced semiconductors produced by ROK companies in China after the one-year relief period ends.<\/span><\/p>\n Under the measure, Samsung Electronics and SK Hynix would have to win approval from Washington item by item when they deliver chip equipment to their Chinese factories.<\/span><\/p>\n