U.S. issues indefinite waiver for Samsung, SK hynix on supplies to China

[Photo by Yonhap]

South Korea’s chip industry is heaving a sigh of relief after the U.S. government officially notified its Korean counterpart of its policy to indefinitely allow semiconductor equipment to be imported into Chinese factories operated by Samsung Electronics Co. and SK hynix Inc.

This decision dispels the uncertainties surrounding semiconductor production facilities in China.

“The U.S. government has made a final decision to supply U.S.-made chip equipment to Samsung Electronics and SK hynix’s factories in China without separate permit procedures and time limits,” Choi Sang-mok, senior presidential secretary for economic affairs, said in a briefing on Monday.

The temporary measure controlling exports of Samsung Electronics and SK hynix’s mass semiconductor technology and equipment to China was scheduled to end this week. The U.S. Department of Commerce has now changed the postponement period to an indefinite period by formally including Samsung Electronics and SK hynix in the list of “verified end users (VEU).”

In October 2022, the U.S. government announced export control measures for advanced semiconductor equipment to China. This required obtaining permission when selling equipment and technology exceeding the standards for producing semiconductors, including logic chips using 18 nanometer or less DRAM, 128-layer or more NAND flash, and FinFet technology.

The U.S. government, however, had applied a waiver until October 2023 for Korean companies such as Samsung Electronics and SK hynix and Taiwanese companies such as TSMC. It then expressed its intention to extend the waiver through various channels since the first half of this year.

Samsung Electronics and SK hynix’s businesses in China, in the meantime, are expected to gain momentum as uncertainties regarding control measures related to the import of major chip equipment have eased, following the confirmation of the guardrail clause of the U.S. CHIPS Act last month.

“After close consultation between our governments, uncertainties regarding the operation of chip production lines in China were significantly resolved,” according to an unnamed official from Samsung Electronics. “We will continue our efforts to ensure the stability of the global semiconductor industry supply chain through close consultation with governments around the world.”

An unnamed official from SK hynix also noted that the company welcomes the U.S. government’s decision to extend the waiver, saying that “the decision will greatly contribute to the stabilization of the global semiconductor supply chain.”

“We will faithfully comply with regulations in various countries and do our best for the development of the global semiconductor industry,” the official added.

Industry insiders noted that local chip companies have established a strategy to maintain their current level of operations in Chinese factories while proceeding with technological upgrades.