June 20, 2023
SEOUL – South Korean chipmakers have reportedly requested that the US government consider an “indefinite exemption” on export controls to China, as they are facing increasing pressure amid an intensifying US-China rivalry, according to industry sources on Monday.
Local semiconductor makers, including Samsung Electronics and SK hynix, submitted requests for validated end-user authorization to the US Department of Commerce, which would allow them to export US-manufactured equipment to factories in China, sources said.
The program is aimed at reducing the licensing burden on industry by allowing US exporters to ship designated items to preapproved entities under general authorization, instead of multiple individual export licenses. The two Korean chipmakers had been on the validated end-user authorization list before the US imposed sanctions against China.
When asked about their reported requests, both Samsung and SK hynix officials took a cautious tone, with one saying, “There’s nothing to comment on.” But sources said the local chipmakers have made efforts to seek either exemptions or a longer grace period from the US export controls.
“Seeking renegotiation (with the US government) to get a one-year waiver imposes a heavier burden on companies to make extra efforts, and causes a greater hardship to set a long-term business plan since nothing is guaranteed,” an industry official said on the condition of anonymity.
Last October, the US Commerce Department imposed sweeping chip-related export curbs on China. For Samsung and SK hynix, which run their key chip factories in China, the US authority offered a one-year waiver, which has allowed the Korean chipmakers to import tools without further licensing requirements.
According to Western media reports last week, US Undersecretary of Commerce for Industry and Security Alan Estevez told an audience at an industry gathering that the government aims to extend exemptions for Korean and Taiwanese chip suppliers with facilities in China.
Industry observers say the US is likely to make a decision on the matter soon, since US semiconductor equipment manufacturers need to plan their equipment production at Chinese factories of large customers, such as Korean chipmakers.
Samsung, the world’s largest memory chip maker, operates chip plants in the Chinese city of Xian, which produce 40 percent of its total NAND flash chips. In Suzhou, the chipmaker runs a semiconductor packaging factory.
SK hynix runs multiple plants in China, including one in the eastern city of Wuxi responsible for producing almost half the chipmaker’s DRAM production.