South Korean Chip Makers Get U.S. Waivers From China Export Rules

The South Korean government said on Monday that the country’s semiconductor manufacturers have secured waivers from U.S. government rules that threatened to limit their businesses in China.

At issue are the continuation of licenses granted last year by the U.S. Commerce Department to Samsung and SK Hynix, the two dominant South Korean chip makers. The licenses effectively suspended 2022 controls on exports of semiconductors and chip making equipment to China.

South Korea, an ally in America’s chip war with China, relies heavily on its semiconductor sector for jobs and revenue. Samsung and SK Hynix dominate the global market for memory chips used in smartphones and laptops. They both produce chips in China.

To curb China’s access to advanced chips that could power its military, Washington imposed restrictions on chip exports last October. It granted Samsung and SK Hynix one-year licenses that allowed them to continue to operate in China, but the looming expiration of those licenses set off concern in South Korea’s semiconductor industry.

“This decision by the U.S. government means that the biggest trade issue for our semiconductor companies has been resolved,” said Choi Sang-mok, senior presidential secretary for economic affairs for Yoon Suk Yeol, South Korea’s president.

In a statement, Samsung said the U.S. decision “significantly removed” uncertainty around its production of semiconductors in China.

SK Hynix said in a statement that it welcomed the U.S. government’s decision, adding that it will “contribute to the stabilization of the global semiconductor supply chain.”

The Commerce Department declined to comment.

The South Korean government said that unlike last year’s one-year exemptions, these waivers did not have a definite end date. The industry has argued that short-term waivers deprived the companies of the certainty they need to make investment decisions and stay competitive.

“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,” said Eric Chen, a research analyst at Digitimes Research, a market tracking company. “But in reality, we cannot avoid the political risks and the uncertainties of geopolitics.”

It was not clear whether a similar waiver had been extended for Taiwan Semiconductor Manufacturing Company, the world’s largest contract chip maker. TSMC, as the company is known, produces some of its less advanced logic chips in two plants in China. TSMC had also been granted a yearlong exemption from the export controls last October. The company was not immediately available for comment.