Korea asks U.S. to reconsider slashing Korean chipmakers in China

Samsung Electronics plant in Xian, China [SAMSUNG ELECTRONICS]

Korea had called on the United States to reconsider its production restrictions on the Korean semiconductor plants in China, according to a U.S. public notice Tuesday.

The request comes about two months after the U.S. Commerce Department said the U.S. CHIPS and Science Act will limit to five percent the expansion of semiconductor manufacturing capacity in China and other "foreign countries of concern" for companies that receive incentives under the new law.

"The ROK believes that the 'guardrail provisions' should not be implemented in a manner that imposes an unreasonable burden on companies investing in the United States," the Korean government said in comments on the proposed rule of the semiconductor bill funding.

"In this vein, the ROK requests the U.S. Government to review the proposed rule's current definitions of 'material expansion', 'legacy semiconductor', and other key terms," it added, according to documents released by the Federal Register.

ROK stands for the Republic of Korea, Korea's official name.

The CHIPS Act offers up to $52.7 billion in subsidies to chipmakers that invest in new production facilities in the United States but allows the U.S. government to "claw back" incentives provided to any company that violates the so-called "guardrail provisions."

Seoul asked to "further clarify the scope of restricted activities under the "Technology Clawback," which prohibits chipmakers from engaging in research or licensing efforts with a "foreign entity of concern."

"The ROK will be submitting more detailed comments to the U.S. Government on how these important points may be addressed," the Korean government said.

"The ROK requests the U.S. Government to actively consider the ROK's comments when finalizing the detailed rules on the 'guardrail provisions'," it added.

BY SOHN DONG-JOO, YONHAP [sohn.dongjoo@joongang.co.kr]