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US Grants Permission for Samsung and SK Hynix to Expand Chip Plants in China

Updated: Jan 8

In a significant concession to South Korea, the United States has allowed Samsung Electronics and SK Hynix to expand their chip plants in China.

US Grants Permission for Samsung and SK Hynix to Expand Chip Plants in China
Credits: Reuters

This decision comes as a victory for the two largest memory makers in the world.

The Biden administration has granted them an indefinite waiver on restrictions that prohibit the shipment of advanced chipmaking equipment to China.

This concession means that Samsung and SK Hynix can now import advanced American machinery that would have otherwise been prohibited from entering China. This is crucial for the Korean companies to sustain and expand their chip-making operations in the world's largest chip arena.

"The US government's decision means that the biggest trade issue for Korean semiconductor companies has been resolved," said Choi Sang-mok, presidential economic adviser. He further emphasised that the stable production of Korean chip companies is directly linked to the stability of the global semiconductor supply chain.

This decision comes as a relief for Hynix, which had warned in 2022 that escalating chip curbs could potentially lead to the closure or sale of one of its major plants in China. Hynix operates a DRAM factory in Wuxi and NAND facilities in Dalian, both in China. These facilities play a significant role in the production of global memory chips, including those used by US companies like Apple.

Samsung Electronics also expressed its satisfaction with the decision, stating that it will continue to work closely with relevant governments to maintain a stable supply chain for the global semiconductor industry.

The 2022 regulations imposed by the US had created uncertainty for foreign operators in China, including Hynix and Samsung. While they initially secured a one-year waiver to import necessary equipment, the extension of that waiver remained uncertain. However, with the recent decision, the restriction has been scrapped for both companies.

In addition to this concession, the Biden administration has also removed a stringent curb on expansion in China by semiconductor companies that receive federal funds to build plants in the US. This move eliminates the US$100,000 spending cap on investments in advanced capacity in China, allowing companies to grow their output of chips more advanced than 28-nanometre.

  • US grants Samsung Electronics and SK Hynix permission to expand chip plants in China.

  • The waiver allows the import of advanced American machinery crucial for sustaining and expanding chip-making operations.

  • The decision resolves a major trade issue for Korean semiconductor companies and ensures stability in the global semiconductor supply chain.

Source: SCMP

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