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US nod for 2 chipmakers lifts curbs

By CHENG YU and MA SI | China Daily | Updated: 2023-10-10 08:53

Semiconductor chips are seen on a printed circuit board in this illustration picture taken Feb 17, 2023. [Photo/Agencies]

Samsung and SK Hynix can export to China plants, stabilizing supply chain

The United States' reported decision to allow South Korea's Samsung Electronics Co and SK Hynix to supply semiconductor equipment to their factories in China is yet another proof that Washington's ill-conceived attempts to contain Beijing's rise in the technology industry are failing; and if the US persists with chip-related export controls on suppliers to China, it could risk losing partners in its global alliances, industry experts said on Monday.

Politically motivated US controls cause huge losses to multinational corporations and disrupt global supply chains, they said after reviewing an announcement on Monday by South Korea's presidential office.

Yonhap news agency reported the presidential office announced the US has decided to allow the world's largest and second-largest memory chipmakers to supply to their China factories without separate approvals. Samsung and SK Hynix have thus received an indefinite US waiver on chip gear supplies to China, experts said.

In October 2022, the US Department of Commerce unveiled rules that require a license for export, re-export or transfer (in-country) to China items including manufacturing equipment and support for DRAM chips 18 nanometers and below, NAND chips with 128 layers or more, and logic chips 14 nm and below. DRAM and NAND are flash memory chips widely used in smartphones, personal computers, servers, data centers and gadgets.

"The US government relaxing its curbs on the Chinese semiconductor sector reflects that its attempts to find allies in other countries to contain China's high-tech industry have failed, pushing it to reexamine the impact of its trade policy on China," said Xiang Ligang, director-general of the Information Consumption Alliance, a telecommunications industry association in China.

"South Korea's success is just a start, as businesses from certain countries, including the Netherlands and Japan, are not willing to sacrifice benefits and incur financial losses for the sake of biased political reasons," Xiang said.

For long, South Korea relied heavily on its semiconductor sector for jobs and revenue. China is a big buyer of chips made in South Korea. Both Samsung and SK Hynix also have major production facilities in China, experts said.

A report from Fitch Ratings, a global credit ratings firm, said factories in China account for 40 percent of Samsung's total NAND memory production capacity, and 40 percent to 50 percent of SK Hynix's DRAM production capacity and 20 percent of its NAND capacity.

On Monday, both companies welcomed the US move. In a statement, SK Hynix said: "We welcome the US government's decision to extend a waiver with regard to the export control regulations. We believe the decision will contribute to the stabilization of the global semiconductor supply chain."

In its statement, Samsung said, "Through close coordination with relevant governments, uncertainties related to the operation of our semiconductor manufacturing lines in China have been significantly removed."

Wei Shaojun, president of the integrated circuit design branch of the China Semiconductor Industry Association, said the US' strict chip restrictions have been severely disrupting the development cycle of the global semiconductor industry and systematically fragmenting the global semiconductor industrial chains.

"The development of high-tech industries requires intense cooperation from various countries. Boosting cooperation in the chip sector among countries will only enhance the competitiveness of the global semiconductor industry," Wei said.

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