"South Korea has been granted an indefinite exemption from the United States, TSMC is still waiting"

The Wall Street Journal reported on October 12, local time, that the United States has agreed that Samsung and SK Hynix have agreed to import US semiconductor equipment from factories in China, which is equivalent to "indefinitely extending the exemption", and Taiwanese chip manufacturers may also be exempted by the United States for another year. The United States has informed Asia's three major chipmakers that it "can maintain its current operations in Chinese mainland for the foreseeable future."

Comprehensive Reuters and a number of Taiwan media reported that the one-year exemption period obtained by TSMC last year expired on October 11 this year, will the United States extend the exemption period for TSMC? Wang Meihua, head of Taiwan's economic department, said in response on October 12 that Taiwan is waiting for the U.S. government's decision on whether to allow Taiwanese chipmakers to extend exemptions for U.S. semiconductor equipment to their factories in Chinese mainland.

"Whether it will be treated the same (indefinite exemption) like Samsung and SK Hynix depends on the announcement of the US government." Wang Meihua said this when speaking to reporters in Taipei on the same day, adding: "TSMC has been granted an exemption for a year, and now we must see whether the US government will further relax these measures." ”

According to reports, TSMC did not respond to Reuters reporters' requests for comment for relevant news and reports. The Wall Street Journal said that TSMC currently has a factory in Nanjing, and the company said in April that the capacity expansion of its Nanjing plant is proceeding as planned.

Data map: Wang Meihua and TSMC founder Zhang Zhongmou Picture from Taiwan media

On October 7 last year, the US Department of Commerce upgraded its crackdown on China's chip industry, comprehensively restricting the export of high-end chips and manufacturing equipment to China, while foreign companies with production bases in China must also be examined piece by piece. However, like TSMC, under the strong opposition of Samsung and SK Hynix, the factories of the two Korean companies in China were granted a one-year exemption to import related equipment, which was originally scheduled to expire on October 11 this year.

The Wall Street Journal reported on October 12 that the Biden administration launched a crackdown on China's semiconductor industry a year ago aimed at curbing China's progress in the field of advanced technology. However, the move especially made South Korea's Samsung and SK Hynix, which dominate the world in the field of memory chips, and TSMC, the world's largest contract chip manufacturer, "uneasy".

According to the report, Samsung, SK Hynix and TSMC are among the few chip manufacturers with a sizeable production base in Chinese mainland. The companies fear that this creates significant barriers to their local operations, hurt their bottom line, and disrupt technology supply chains. Although the Biden administration approved a one-year waiver for the three companies last October, "concerns" remain.

Now, the Wall Street Journal quoted people familiar with the US government's movements in its report as saying that as in October last year, TSMC will again be granted a one-year exemption. The report also claimed that Washington told TSMC that the company could maintain Chinese mainland operations for the foreseeable future as long as it did not carry out "major technological upgrades."

Exterior view of TSMC's Nanjing factory park

Earlier, on October 9, the South Korean presidential office reported that the US government had agreed to Samsung and SK Hynix importing US semiconductor equipment from factories in China without other permits, which is equivalent to indefinitely extending the exemptions previously obtained by the two companies.

Choi Sang-mook, chief economic secretary of the South Korean presidential office, said at a press conference on the same day that the US government recently informed the South Korean side through the economic security dialogue channel of the export control department and the National Security Council, and the United States finally decided to designate Samsung Electronics and SK Hynix semiconductor factories in China as "verified end users" (VEU).

The so-called "VEU list" is a whitelist mechanism that allows only companies that have received prior approval from the U.S. government to export designated items. If listed as a VEU, companies do not need additional approval to apply for a U.S. export ban exemption. Korean media analysis pointed out that this is in fact an indefinite exemption for the export of US chip equipment.

For this decision of the US government, Samsung and SK Hynix welcomed it. SK Hynix responded to the observer network on October 9 that the Chinese factory designated by the US government as VEU will make a great contribution to the stability of the global semiconductor supply chain, and the company will honestly abide by the laws and regulations of various countries in the future and make every effort to develop the global semiconductor industry.

South Korean chip manufacturers Samsung and SK Hynix

At present, Samsung and SK's factories in China are undergoing renovation and upgrading, and need to import a variety of equipment. In order to ensure their normal production activities, the two countries continue to negotiate on the development of separate equipment export standards for Korean companies in China. Yonhap News Agency previously quoted analysis that for the United States, the implementation of the new regulations is inseparable from South Korea's assistance, if Korean companies are adversely affected, it will be difficult for the South Korean government to actively cooperate with the United States. The "Korean National Daily" mentioned that this is also a measure taken to some extent to consider that the domestic semiconductor supply in the United States may not be smooth.

Some analysts previously believed that the extension of the waiver by the U.S. Department of Commerce would weaken the effect of U.S. export controls on China in the field of chips. Some industry executives believe that the U.S. Department of Commerce will extend the exemption period, rather than gradually reduce or even cancel the exemption to strengthen chip export controls to China, which means that the US government realizes that in a highly integrated global industry, "decoupling" high-tech products from China is far more difficult than expected.

The Wall Street Journal said that other semiconductor companies and foreign governments have also been closely monitoring the status of these exemptions to understand how the strict impact of U.S. export restrictions on investment in China after this fall.

Previously, Chinese Foreign Ministry spokesman Wang Wenbin pointed out on the introduction of the "chip bill" by the United States that the so-called "guardrail" of the United States is an outright act of scientific and technological blockade and protectionism, and in order to maintain its own hegemony, the United States constantly generalizes the concept of national security, abuses export control measures, and even does not hesitate to sacrifice the interests of allies, coerces some countries to contain and contain China, artificially promotes the "decoupling and breaking of the chain" of the industrial chain, seriously violates the laws of market economy and the principle of fair competition, and seriously hinders the recovery and development of the world economy. We resolutely oppose this and have made solemn representations to the US side on many occasions. China will continue to firmly safeguard the legitimate and legitimate rights and interests of Chinese enterprises.

Wang Wenbin stressed that curbing and suppressing will not stop the pace of China's development, but will only enhance China's determination and ability to achieve high-level scientific and technological self-reliance and self-improvement. In order to safeguard one's own hegemonic selfishness, the kidnapping of normal international economic and trade cooperation will eventually become a cocoon and self-restraint. We hope that all parties will proceed from their own long-term interests and the principle of fair and just market, abide by international economic and trade rules, and work with China to safeguard the stability of the global industrial chain and supply chain, and safeguard the common interests of all parties.

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