The South Korean government announced on Monday that semiconductor manufacturers in the country have obtained waivers from U.S. government rules that could have restricted their operations in China.
The issue revolves around the renewal of licenses granted by the U.S. Commerce Department to Samsung and SK Hynix, the two dominant chip makers in South Korea. These licenses effectively suspended export controls on semiconductors and chip making equipment to China in 2022.
South Korea heavily relies on its semiconductor sector for employment and revenue and is an ally in the U.S.-China chip battle. Samsung and SK Hynix dominate the global market for memory chips used in smartphones and laptops, manufacturing chips in China as well.
To restrict China’s access to advanced chips that could be used for military purposes, Washington imposed restrictions on chip exports in October last year. Samsung and SK Hynix were granted one-year licenses to continue operating in China. However, the imminent expiration of these licenses raised concerns in South Korea’s semiconductor industry.
Choi Sang-mok, senior presidential secretary for economic affairs for Yoon Suk Yeol, South Korea’s president, stated, “This decision by the U.S. government means that the biggest trade issue for our semiconductor companies has been resolved.” Samsung expressed relief over the U.S. decision, stating that it “significantly removed” uncertainty around its semiconductor production in China.
SK Hynix also welcomed the U.S. government’s decision, emphasizing that it will contribute to the stability of the global semiconductor supply chain. The Commerce Department chose not to comment on the matter.
In contrast to the one-year exemptions granted last year, the South Korean government mentioned that these waivers do not have a definite end date. The industry argues that short-term waivers hinder companies’ ability to make investment decisions and remain competitive.
Eric Chen, a research analyst at Digitimes Research, a market tracking company, stated, “This kind of indefinite exemption is the most stable condition for companies, and only in this way can they consider restarting their investments in China. But in reality, we cannot avoid the political risks and uncertainties of geopolitics.”
It remains unclear whether a similar waiver has been granted to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip maker. TSMC produces some of its less advanced logic chips in two plants located in China. The company was also granted a one-year exemption from export controls in October last year. TSMC has not provided immediate comment on the matter.