U.S. Chips Act requirements 'concerning': Korean trade minister

Minster Lee Chang-yang of Trade, Industry and Energy [NEWS1]

The recently released requirements for the U.S. chip manufacturing subsidy program are “concerning,” the trade minister said Monday, promising to negotiate with the United States on the details of the conditions.

“The requirements for receiving funding from the U.S. chip subsidy program are uncertain and cover too many areas,” said Lee Chang-yang, minister of Trade, Industry and Energy on Monday during a press meeting.

“There are also several clauses that require submitting information related to the fundamental business operations,” that may harm the business activities of Korean companies, Lee said.

On Feb. 28, the U.S. Commerce Department released a notice of funding opportunities under a $3.9 billion manufacturing subsidy program for chip production facilities.

It is part of a Chips and Science Act $5.3 billion incentive funding program. The U.S. Chips and Science Act, which was passed in July, offers subsidies and tax benefits for companies executing semiconductor-related investments in the country.

In order to win funding over $150 million, recipients are required to “share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections.”

“The U.S. government will withdraw the provided subsidy by up to 75 percent if the profits exceed the forecast, but it is difficult to predict how the profit would turn out,” Lee noted, and saying that "the government will continue to negotiate with the United States to lessen the requirements that pose too much burden on the companies,"

When asked about the U.S. export restriction on China, the minister said that “the basic principle is that we cannot accept requirements that may pose a significant burden in the local companies’ business operations in China.”

On Oct. 7 last year, the U.S. Commerce Department announced a series of measures to limit China's access to technology that could be used in weapons or to develop weapons. The rules mandated companies to acquire approval from the U.S. government to supply their factories in China with advanced chipmaking technologies.

Samsung Electronics and SK hynix, which are running chip plants in China, received one-year waivers from the newly imposed rules in October. Whether the waiver will be extended is yet to be decided.

The Center for Strategic and International Studies (CSIS), a U.S. think tank, said that Korea should join the export sanctions against China.

"Germany and South Korea need to join the new export controls agreement in order to prevent the fracturing of the U.S.-led global
semiconductor value chain," argued a CSIS report released on Mar. 1, saying that "Korea is both a leader in chip manufacturing and a small but sophisticated producer of manufacturing equipment."

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]