U.S.'s tightened curbs on chip exports to China will minimally impact Korea

The latest US sanctions on chip exports to China will have limited impact on Korea, as its production of advanced AI chips is minimal, according to the Korean government.

U.S. Secretary of Commerce Gina Raimondo listens during a virtual meeting with US President Joe Biden Deputy Secretary of Defense Kathleen Hicks, CEO's and labor leaders called to discuss the importance of passing the Chips Act to bolster America's competitive edge, its manufacturing power and national security at the White House in Washington, DC in July 2022. [UPI/YONHAP]

The United States' latest update to tighten chip sanctions on China will have limited impact on Korea, the Korean government said Wednesday.

“Korea's production of advanced AI chips is minimal and chips sold for consumers are exempted from the controls,” said Korea's Ministry of Trade, Industry and Energy in a release Wednesday.

The U.S. Department of Commerce on Tuesday fortified export curbs of chips to China in a bid to amend loopholes of the existing rule that enabled China to work its way around to obtain advanced chips and equipment from the U.S.

Nvidia's A800 and H800 chips are representative cases as they were made specifically for the Chinese market to get around the sanctions imposed by the U.S. last year. They are a slower version of the top-tier A100 and H100 chips which fall short of the performance threshold set by the U.S. government.

The latest update, however, will ban A800 and H800 chips from being exported to China. The new curb will be effective from Nov. 13.

The commerce department updated parameters that identifies restricted chips to China, replacing the term “interconnect bandwidth” with “performance density threshold” as a way to “preempt future workarounds.”

Nvidia shares plunged by as much as 7 percent during the trading session on Tuesday upon the news.

Korea's SK hynix which supplies its advanced HBM chips to Nvidia didn't budge, closing at 130,000 won per share, unchanged from the previous trading day.

“In the case of chip equipment, Korean companies have obtained VEU (Validated End-User) status leading to near zero impact from the latest sanctions,” the industry ministry said.

“The Korean government will closely analyze the export control measures and make continuous efforts to minimize impact on the Korean industry.”

Korean chipmakers were included on the list of VEUs by the U.S. government earlier this month, granting them with a comprehensive permit to bring American chip tools to their Chinese facilities without having to license them individually.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]