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US Seeks to Limit Samsung, TSMC Expansion in China and Russia

Written: 2023-03-22 15:12:12Updated: 2023-03-22 18:31:26

US Seeks to Limit Samsung, TSMC Expansion in China and Russia

Photo : KBS News

Anchor: To strengthen domestic semiconductor production, Washington last year passed the so-called CHIPS Act, under which some 52 billion dollars will be offered to semiconductor researchers and manufacturers in grants. The U.S. on Tuesday unveiled detailed conditions attached to those grants, effectively prohibiting Samsung Electronics, TSMC and other potential recipients from expanding their production capacities in China and Russia by more than five percent. The Seoul government says South Korean manufacturers can handle the requirements for the grant.
Tom McCarthy has more.

Report: The U.S. government announced a set of guardrails for its CHIPS and Science Act to limit the expansion of production capacity in China by companies that receive funding.

The U.S. Department of Commerce on Tuesday unveiled the details of the restrictions intended to protect national security applied to foreign companies that receive funds with manufacturing activities in “countries of concern,” a list that includes China and Russia among others.

The guardrails apply a five-percent cap on the expansion of production for advanced chips for ten years, while older technology is subject to a ten-percent limit.

Companies that fall afoul of the rules risk forfeiting the entire funding allocation received.

Seoul had earlier expressed concern about the effect of the forthcoming protections on domestic chipmakers, with Samsung Electronics producing 40 percent of its NAND flash in the Chinese city of Xian, while SK Hynix manufactures 40 percent of its DRAM in Wuhan and 20 percent of its NAND flash in Dalian, China.

After the restrictions were officially released, the trade ministry assessed that there exists room for South Korean semiconductor manufacturers to expand their production capacity in China to some degree. 

The ministry determined that the companies will be permitted to perform maintenance on their facilities in China and engage in limited expansion and technological development.

The South Korean ministry said it plans to continue consulting with the U.S. on the matter during the 60-day period before the finalization of the guardrails, with a visit to Seoul by U.S. officials handling the Act set for Thursday.
Tom McCarthy, KBS World Radio News.

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