ALBAWABA – The United States (US) agreed to an indefinite exemption for South Korean companies with factories in China to supply their facilities there with chipmaking equipment that is otherwise subject to the US ban, issued last year, news agencies reported Monday.
In May, US and South Korean government officials engaged in a months-long debate to arrive at a mechanism that would not require submitting for an extension every time the exemption period elapses.
Until yesterday, South Korean companies with factories in China, namely Samsung Electronics and SK Hynix, have been operating there under a temporary one-year moratorium on US export controls. The moratorium was issued in October 2022, South Korean news agencies reported.
A moratorium is a specific temporary suspension of or exemption from restrictions.
"Uncertainties about South Korean semiconductor firms' operations and investments in China have been greatly eased; they will be able to calmly seek long-term global management strategies," Choi Sang-mok, senior presidential secretary for economic affairs, told Reuters.
The US has already notified Samsung and SK Hynix of the decision, indicating it is in effect as of yesterday, Choi said.
The U.S. Department of Commerce is updating its "validated end user" list, denoting which entities can receive exports of which technology, to allow Samsung and SK Hynix to keep supplying certain US chipmaking tools to their China factories, the presidential office said.
The US, China and Taiwan have been in a disruptive tech race that resulted in American bans on the export of chipmaking equipment to China, with exemptions issued to South Korean companies with factories in China - Shutterstock
Once included in the list, there is no need for South Korean companies with factories in China to obtain permission for separate export cases, Reuters explained.
Samsung and SK Hynix, the world's largest and second-largest memory chipmakers, had invested billions of dollars in their chip production facilities in China and welcomed the move.
"Through close coordination with relevant governments, uncertainties related to the operation of our semiconductor manufacturing lines in China have been significantly removed," Samsung said in a statement.
SK Hynix also welcomed “the U.S. government's decision to extend a waiver with regard to the export control regulations. We believe the decision will contribute to the stabilisation of the global semiconductor supply chain."
Samsung Electronics makes about 40 percent of its NAND flash chips at its plant in Xian, China, while SK Hynix makes about 40 percent of its DRAM chips in Wuxi and 20 percent of its NAND flash chips in Dalian.
The companies together controlled nearly 70 percent of the global DRAM market and 50 percent of the NAND flash market as of end-June, data from TrendForce showed.
