(News Focus) Samsung, SK hynix breathe sigh of relief as U.S. 'guardrails' are less tough than feared

By Woo Jae-yeon

SEOUL, March 22 (Yonhap) -- South Korean chipmakers appeared to breathe a sigh of relief Wednesday, as the U.S. government's new rules for the Chips Act, announced last night, were less stringent than had been previously feared.

Washington said late last month it would ban any recipient of federal money from the US$53 billion act, designed to revitalize the American chip industry, from making a "material expansion of semiconductor manufacturing capacity" in countries of concern, in an apparent reference to China.

In additional details on and definitions for national security guardrails, the U.S. government defined the material expansion as "increasing a facility's production capacity by 5 percent," opening room for chipmakers to make technological upgrades in their Chinese factories.

"It seems like the worst case has been avoided," an official from South Korea's chip industry told Yonhap News Agency on condition of anonymity. Another source, who also asked not to be named, echoed similar sentiment.

The guardrails helped resolve some of the business uncertainties related to the Chips Act, industry sources said, at a time when South Korean chip companies have been already reeling from macroeconomic woes and separate export curbs on chipmaking equipment the U.S. government placed in October.

Many in the industry had worried that the two companies might need to develop an exit strategy from the Chinese market in a worst-case scenario.

Samsung Electronics Co., the world's largest memory chip maker, said, "We have been in close discussions with the relevant government agencies of the U.S. and Korea, and plan to determine our next steps after reviewing the details of today's announcement."

"With uncertainties being cleared through discussions between the Korean and the U.S. governments, we will closely review the U.S. government's announcements," SK hynix Inc. said in a statement.

Samsung and SK hynix have been balancing on a tight rope between growing technology and a security rivalry between Washington and Beijing.

The two tech firms run significant semiconductor manufacturing operations in China, with Samsung Electronics producing some 40 percent of its NAND flash and SK hynix manufacturing about half of its global DRAM chips in China.

In the U.S., Samsung is building a $17 billion chip facility in Taylor, Texas, and SK hynix has said it planned to select a site for a semiconductor packaging plant there in the first half.

South Korea's industry ministry said Wednesday it expected South Korean chipmakers with operations in China to continue maintenance and "partial expansion" of their facilities, and to be able to "keep up their technology upgrades."

The ministry said it will continue coordinating closely with the U.S. government to relay Korean chipmakers' concerns and advance shared goals.

jaeyeon.woo@yna.co.kr
(END)