Korean chipmakers sigh in relief over U.S. CHIPS Act 'guardrails'

Tech

Published: 23 Sep. 2023, 15:29 Updated: 25 Sep. 2023, 09:32

Korean chipmakers sigh in relief over U.S. CHIPS Act 'guardrails'

The U.S. Commerce Department said in March that it will limit recipients of the CHIPS and Science Act funding from investing in the expansion of semiconductor manufacturing in "foreign countries of concern," including China and Russia. [SHUTTERSTOCK]

The U.S. Department of Commerce released the final rule of the national security "guardrails" of the CHIPS and Science Act that bar chipmakers receiving subsidies under the act from expanding their manufacturing capacity in “foreign countries of concern,” including China, for 10 years.

While the announced final “guardrails” resolve some of the uncertainties surrounding Korean chipmakers’ operations in China, they only partially reflected the Korean government’s requests in March.

The department defined material expansion as increasing a facility's production capacity by "more than five percent" by wafer input. The rule also prohibits the expansion of production capacity for legacy facilities beyond 10 percent.

U.S. guardrails on China imminent, Korean chipmakers on high alert

Korea's Ministry of Trade, Industry and Energy in March had proposed upping the production expansion threshold from the initial five percent to 10 percent on advanced facilities.

The production capacity will be measured annually, from the initially proposed monthly, which the ministry says will give more leeway for chipmakers considering seasonal differences.

The Commerce Department removed an initially proposed $100,000 spending limit on investments in advanced capacity in China as an industry group of chipmakers, including Samsung Electronics, has expressed concern that such restrictions could hurt future business operations, according to Bloomberg.

"One of the Biden-Harris Administration's top priorities ... is to expand the technological leadership of the U.S. and our allies and partners," Secretary of Commerce Gina Raimondo was quoted as saying in a press release. "These guardrails will protect our national security and help the United States stay ahead for decades to come."

Korea's Industry Ministry expects “normal” business activities of Korean firms will be guaranteed following the final rule.

"Going forward, we will continue cooperation with the U.S. government to strengthen global supply chains for semiconductors and guarantee our enterprises' investment and business activities," the ministry said in a press release.

The guardrails were first proposed in March to "ensure technology and innovation funded by the CHIPS and Science Act is not used for malign purposes by adversarial countries against the United States or its allies."

Industry Minister Bang Moon-kyu asked U.S. Deputy Secretary of Commerce Don Graves in a meeting on Friday to address Korean chipmakers’ concerns, Bang’s office said.

Graves told Yonhap News Agency that Washington “will do everything” to ensure that Korean firms can continue their legitimate business.

BY JIN EUN-SOO, YONHAP [jin.eunsoo@joongang.co.kr]