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The US plans to revise its idea on chip sanctions to allow Samsung and TSMC to remain in Chinese mainland business

Update time : 2023-06-14 11:36:01

As US chip sanctions spread to more chip companies, now US President Joe Biden plans to extend export control policy exemptions for South Korean and Chinese and Taiwanese companies to ease the imbalance in the semiconductor industry.
The Biden administration intends to extend an existing exemption from U.S. semiconductor export control policies that would allow South Korean and Taiwanese semiconductor makers to maintain operations in mainland China, Alan Estevez, undersecretary of commerce for industry and security, said at an industry conference last week, according to the Global Times, citing the Wall Street Journal. He also said "these exemptions will be renewed in the foreseeable future".

The report said that this will affect Samsung, SK Hynix, TSMC and many other chip semiconductor manufacturers in mainland China's existing fab investment layout, to maintain the existing chip business in mainland China, without being retaliated by the U.S. side. In this statement, the U.S. Department of Commerce will not comment.
It is reported that on October 7 last year, the U.S. Department of Commerce under the Bureau of Industry and Security (BIS) issued a new, wide-ranging set of export control measures to restrict U.S. companies to export advanced artificial intelligence (AI) and supercomputing chip manufacturing, production equipment and certain tools needed to implement new restrictions to upgrade the crackdown on China's chip semiconductor industry, and to promote the Netherlands, Japan, South Korea, the Taiwan, China and others are no longer allowed to sell chips and chip manufacturing equipment to mainland China for advanced manufacturing processes as defined by the United States.
Under this policy, Chinese entities with facility licences will face a "presumption of denial" and US, Korean and Japanese suppliers who sell cutting-edge production equipment to local Chinese chipmakers for the production of DRAM chips at 18nm or below, NAND flash memory chips at 128 layers or above, logic chips at 14nm or below The new export control regulations will require a license and will be subject to strict scrutiny, covering all aspects of chip design, manufacturing and materials.
Semiconductor companies have been deeply affected by the implementation of the new export control regulations. In November last year, US semiconductor equipment giant Panlin said the BIS ban would reduce the company's 2022 revenue by 30%, or US$2.0-2.5 billion, and its sales in mainland China would plummet by 50%, followed by 1,300 job cuts; chip equipment giant KLA's 2023 revenue would be reduced by US$600-900 million as a result; Nvidia announced in October last year that, due to the ban Nvidia lost US$400 million in potential sales in China in the third quarter of 2022 and launched a China-specific version of its A800 AI chip; and the situation is not good for Korean semiconductor companies either.
Following strong opposition from Samsung and SK Hynix, the US has granted a one-year exemption from export controls to Korean companies until October of this year. Also exempted was TSMC of Taiwan, China.
Under the current downward "chill" in the chip and semiconductor industry, the US policy has undoubtedly caused a huge impact and influence on the entire industry chain. According to the Chinese Ministry of Commerce announced in December last year, China resorted to the WTO dispute settlement mechanism for the US export control measures on chips and other products to China. China said that the US side's obstruction of normal international trade in products such as chips is a typical trade protectionist practice.
China is South Korea's largest export market for semiconductors. The Korea Chamber of Commerce and Industry has pointed out that exports of Korean semiconductor products to China surged from 3.2 per cent of overall exports to China in 2000 to 39.7 per cent last year. In the past 20 years, Korea's export dependence on China for semiconductor products has skyrocketed by nearly 13 times. As a result, US policy has led some Korean companies to feel so uneasy that they are considering dropping US government aid.
US officials have said in recent weeks that they are not seeking to disassociate themselves from China. US Treasury Secretary Yellen has said in several speeches that a complete separation from the Chinese economy would be disastrous for both the US and China, while US President Joe Biden said at a press conference after the G7 summit that the US was not seeking to decouple from China.
On the other hand, however, the US Department of Commerce this morning added 31 Chinese entities to its "Entity List", including the Shanghai Supercomputing Center's Shanghai Hikari Information Technology Co. The "Entity List" is one of the US sanctions tools, mainly restricting the export of advanced US technology and products. According to incomplete statistics of Titanium Media App, more than 70 Chinese enterprises and research institutions have entered the US BIS "Entity List".
According to an article published by Core Research on June 12, the current Sino-US semiconductor fight has entered a box shaking phase - there may be repetitions in a small range, but the broad pattern is basically determined. Under the pressure of US companies actively looking for cooperation with Chinese companies, the US government continues to keep a close eye on key Chinese companies and key areas while being willing to let US companies get out of the woods with the help of the Chinese market. Opportunities for international cooperation in this context are expected to emerge gradually.
At the 2023 Export Control Compliance Forum held on 23 February this year, Jiang Chenghua, Director of the Bureau of Industrial Security and Import and Export Control of the Ministry of Commerce, mentioned that China is continuously improving its export control legal system and sounding the national export control management system. Export control compliance is an important part of corporate compliance. Compliance is the basis of safety, and non-compliance is the source of risk, and the development direction of export control compliance is rule of law, standardisation and internationalisation. At present, the legislative process of the Regulations on the Export Administration of Dual-Use Items is being accelerated.
"We encourage enterprises to establish a sound internal compliance mechanism and to fasten and fit the 'compliance' seat belt." Jiang Chenghua suggested that corporate compliance is becoming increasingly important and that external legal advisors can be hired to participate in corporate compliance work when necessary.
As of the close of trading on June 13, the shares of Samsung Electronics, SK Hynix and TSMC, which were covered in the above report, were all reported to have risen sharply. Among them, Samsung Electronics shares in South Korea rose 1.41%, SK Hynix rose 4.09% and TSMC shares rose 3.31%.

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