Samsung, SK Hynix get indefinite waiver on export of US chip gear to China

South Korean chipmakers Samsung Electronics and SK Hynix have been granted an indefinite waiver on a requirement for licenses to bring US chip equipment into China, allowing both companies to sustain and expand their chipmaking operations in the country.

Reports said that the Biden administration has already informed both companies of the decision, and the US Department of Commerce is updating its "validated end user" list to allow Samsung and SK Hynix to keep supplying certain US chipmaking tools to their factories in China.

The "validated end user'' list contains information about which entities can receive US exports of which technology. Once included in the list, a company does not need to get permission for separate export cases.

"The US government's decision means that the biggest trade issue for Korean semiconductor companies has been resolved," said Choi Sang-mok, South Korea's senior presidential secretary for economic affairs, during a press conference held Monday. "Korean chip companies are key suppliers and equipment consumers, accounting for 60.5% of the world’s memory output, and their stable production is directly linked to the stability of the global semiconductor supply chain."

Last October, the US government enforced export restrictions on several advanced semiconductor manufacturing equipment, preventing companies from shipping them into China as the geopolitical tension escalates between the two countries.

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Samsung Electronics and SK Hynix run US equipment in their China factories and both companies received a one-year waiver on the export restrictions amid concerns of business disruptions. The latest decision to grant an indefinite waiver removes uncertainties over their chip production in the country.

"Uncertainties about South Korean semiconductor firms' operations and investments in China have been greatly eased; they will be able to calmly seek long-term global management strategies," said Choi, adding that the extended waiver takes effect immediately.

Samsung Electronics and SK Hynix are the world's largest and second-largest memory chipmakers respectively. Data from TrendForce showed the two companies together controlled nearly 70% of the global DRAM market and 50% of the NAND flash market as of end-June.

Samsung Electronics makes about 40% of its NAND flash chips at its plant in Xian while SK Hynix makes about 40% of its DRAM chips in Wuxi and 20% of its NAND flash chips in Dalian.

In separate statements, both companies welcomed the waiver extension.

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"Through close coordination with relevant governments, uncertainties related to the operation of our semiconductor manufacturing lines in China have been significantly removed," a Samsung Electronics spokesperson said. “We will continue to work closely with all relevant governments to maintain a stable supply chain for the global semiconductor industry.”

SK Hynix said: "We welcome the US government's decision to extend a waiver with regard to the export control regulations. We believe the decision will contribute to the stabilization of the global semiconductor supply chain."