At the end of July, U.S. semiconductor companies claimed that the U.S. Department of Commerce extended the ban on equipment exports from Chinese chip companies from 10-nanometer process to 14-nanometer. And not only for local Chinese companies, but also for factories of foreign companies in China. This worries South Korean semiconductor giants Samsung and SK Hynix, which have already invested and set up factories in China.
However, on August 29, the “Dong-A Ilbo” quoted a diplomatic source as saying that the U.S. Department of Commerce told the South Korean government that the export restrictions will not affect Korean companies’ factories in China. Korean companies finally “sighed in relief”.
According to the Dong-A Ilbo, the chief executives of U.S. semiconductor equipment manufacturers Fanlin Group and Kelei both said late last month that they had received a letter from the U.S. Department of Commerce requesting that “export restrictions on China be extended to 14nm and below semiconductor equipment”.
This restriction measure in the United States originally targeted Chinese local semiconductor companies and processes of 10nm and below, but as the target expanded from local Chinese companies to all factories in China, the technology restrictions were expanded from 10nm and below to For processes of 14 nanometers and below, South Korean companies are also included in the restricted scope.
The report pointed out that firstly, both Samsung and SK Hynix have semiconductor factories in China; secondly, the 14-nanometer process is usually a watershed for distinguishing cutting-edge semiconductors, and the expansion of technical restrictions to 14-nanometer and below means that Korean companies will not be able to import and use their factories in China. Extreme ultraviolet (EUV) high-end equipment produces cutting-edge semiconductors; not only that, the United States is also trying to limit the use of the previous generation of deep ultraviolet (DUV) equipment. If Korean companies’ factories cannot even import these equipment, there will be mistakes in production. .
SK hynix’s factory in Wuxi.Source: Jiangsu Natural Resources Department
U.S. Commerce Department says South Korean companies will be pardoned
However, things turned around on the 28th. A diplomatic source said on the same day: “The U.S. Department of Commerce explained to the South Korean government that the export restrictions will not affect South Korean companies in China.” In other words, South Korean companies were exempted.
U.S. equipment plays a pivotal role in South Korea’s semiconductor industry, because while South Korean semiconductors are their strong industry, a lot of core equipment relies on imports from the United States. The JoongAng Daily reported that the more money South Korea’s semiconductor exports make, the more South Korean companies will spend on importing production equipment from the United States. Before the outbreak, the trade value of South Korea’s annual import of semiconductor manufacturing equipment from the United States was far greater than the trade value of South Korean semiconductor products exported to the United States.
Because of this, the “Dong-A Ilbo” believes that with the opening of the US exemption, South Korean semiconductor companies such as Samsung and Hynix can finally breathe a sigh of relief.
As for why the United States is open to South Korean companies, the report believes that this may be following the implementation of the “Inflation Reduction Act”. Choose to take care of South Korea in other ways. According to the report, Daniel Kritenbrink, assistant secretary of state for East Asian and Pacific affairs, said during a visit to South Korea: “I didn’t expect South Koreans to be so worried regarding the Inflation Reduction Act.”
Another explanation is that the United States wants to stabilize the attitude of South Korea in order to win over South Korea, Japan and Taiwan to form a “Quartet Alliance of Chips”. According to the South Korean President’s Office, the meeting of the “Quartet of Chips” is likely to be held following the Mid-Autumn Festival holiday.
