Chip plants in China won’t be forced to shut if firms receive US funding, says South Korea

South Korea’s trade ministry said on Wednesday that the United States’ proposed rules to prevent $52 billion in chip funding from being used by “countries of concern” will not force recipients to shut down their China factories.

The US Commerce Department on Tuesday proposed limits for recipients of US chip manufacturing and research funding, including limits on investing in expansion in countries such as China and Russia.

The world’s largest and second-largest memory-chip makers, Samsung Electronics and SK Hynix, have chip production facilities in China.

Samsung is building a chip plant in Texas that could cost more than $25 billion, while SK Hynix parent SK Group announced last year plans to invest $15 billion in the US chip industry. Both may apply for funding.

The proposed rules for funding recipients limit chip production capacity growth in China to 5% over 10 years as measured by wafers, and 10% for older legacy chips, the trade ministry said.

They do not restrict investments in technology and process upgrades, or equipment replacement necessary for the operation of existing facilities, the ministry added.

Discover the stories of your interest


“For production facilities our companies are operating in China, it is expected that maintenance and partial expansion as well as technology upgrades will continue to be possible,” the trade ministry said in a statement. “As technology is upgraded, chips per wafer can be increased… which could further expand production depending on corporate strategies.” The South Korean government plans to communicate with the local industry, analyse proposed rules, and consult with US counterparts within 60 days, the ministry said.

Uncertainty includes what happens when the one-year waiver for Samsung and SK Hynix to receive chip equipment needed in China expires in October, said an industry source, who declined to be named because of the sensitivity of the matter.

Samsung and SK Hynix said they would review the details of the announcement.

The ministry noted that Samsung’s recent plan to invest $230 billion in South Korea over 20 years to develop a large chip-making base was in line with uncertainties in investing in China or the United States.

Stay on top of technology and startup news that matters. Subscribe to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.

For all the latest Technology News Click Here 

Read original article here

Denial of responsibility! TechAI is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.