Korean chipmakers get green light on Chinese operations

Samsung Electronics and SK hynix are now authorized by the U.S. government to bring advanced chip equipment and technology to their Chinese operations indefinitely, resolving major uncertainties for the Korean chipmakers.

Choi Sang-mok, senior presidential secretary for economic affairs, speaks during a briefing on Monday, at the presidential office in Yongsan District in central Seoul.

Samsung Electronics and SK hynix are now authorized by the U.S. government to bring advanced chip equipment and technology to their Chinese operations indefinitely, resolving major uncertainties for the Korean chipmakers that have been lingering since last year.

“The latest decision by the U.S. government means the biggest trade agenda for Korea’s chipmakers has now been cleared,” said Choi Sang-mok, senior presidential secretary for economic affairs, during a briefing on Monday.

“The U.S. government’s decision has been passed on to Samsung Electronics and SK hynix. The decision will take effect immediately upon notification.”

Samsung and SK hynix's Chinese operations have been included in the list of Validated End-users (VEU) by the U.S. government which permits them to export certain American tools to preapproved entities without having to repeatedly ask for authorization.

Last October, the U.S. government announced a set of rules that restrict taking advanced chip manufacturing equipment and technology to China in its apparent effort to curb China from gaining superiority in the chip battle.

Samsung Electronics and SK hynix, however, were issued with a one-year waiver from the regulations, considering their hefty reliance on Chinese operations.

That was due to expire in October and whether the waiver will get extended was of primary concern for both the companies as well as for the country which holds big ambitions for the chip industry.

Samsung Electronics is running a chip factory in Xi'an that is responsible for approximately 40 percent of the company's production of NAND flash chips. SK hynix also runs plants in Wuxi that handle 40 percent of the company's DRAM chip production.

"Uncertainties regarding Korean chipmakers' operation in China and investment have been resolved, allowing companies to come up with long-term global strategies in a calm manner," Choi said.

"Korean chipmakers, which account for 67.5 percent of global memory chip production, are major users of the equipment which means that our companies' stable operation is directly related to the global supply of the chips."

The presidential office also said Monday that the Inflation Reduction Act (IRA) which went into effect one year ago did not deteriorate Korea's EV business in the United States despite concerns.

"In August, sales of Korean EVs in the United States have hit an all-time high of 14,000 units, accounting for 10.9 percent of the market in second spot."

The IRA, which was signed into law by U.S. President Joe Biden in August 2022, gives up $75,000 in tax credits to buyers of EVs assembled only in North America and it was considered a burden for Korean automakers which manufacture most of their EVs in Korea.

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