Trade Exemptions – Between a Rock and A Hard Place
While the US government seems intent on expanding trade restrictions on semiconductor equipment for Chinese foundries, it seems that they will be making exceptions for those semiconductor fabs in China that are operated by South Korean firms, Samsung Electronics and SK Hynix (000660.KS), according to an anonymous diplomatic source in Korea. As we have previously noted, US equipment vendors have received notification from the US Department of Commerce asking them to end the sale of tools and software used in the production of chips at or under 14nm, essentially making it more difficult for Chinese OEMs to design advanced node devices and similarly making it more difficult for Chinese foundries to produce same.
While the US has already been rejecting license applications for sales of such equipment from a number of US vendors, limiting the financial impact to a degree, with US ally South Korea having two fabs on the Mainland, getting equipment to those fabs would technically violate the US trade rules, which is the reason the US has recently spoken to the South Korean government, explaining that the fabs operated by Korean firms will not face the increased restrictions being placed on Chinese semiconductor companies. Samsung and SK Hynix both produce NAND and DRAM at the Chinese facilities, which some would consider less than advanced technology, which would likely be the official basis for the exemption, but it seems that China has little recourse regardless of the reason, as punishing Samsung and Hynix for their relationship with the US would only serve to add to the possibility that neither company will look toward expanding its footprint in China. The Chinese trade press is making considerable noise about how the country is expanding its efforts in EDA and production tools but the development of such an industry locally will be a long one and will leave China’s semiconductor industry years behind in the development of advanced processes until successful.
While the US has already been rejecting license applications for sales of such equipment from a number of US vendors, limiting the financial impact to a degree, with US ally South Korea having two fabs on the Mainland, getting equipment to those fabs would technically violate the US trade rules, which is the reason the US has recently spoken to the South Korean government, explaining that the fabs operated by Korean firms will not face the increased restrictions being placed on Chinese semiconductor companies. Samsung and SK Hynix both produce NAND and DRAM at the Chinese facilities, which some would consider less than advanced technology, which would likely be the official basis for the exemption, but it seems that China has little recourse regardless of the reason, as punishing Samsung and Hynix for their relationship with the US would only serve to add to the possibility that neither company will look toward expanding its footprint in China. The Chinese trade press is making considerable noise about how the country is expanding its efforts in EDA and production tools but the development of such an industry locally will be a long one and will leave China’s semiconductor industry years behind in the development of advanced processes until successful.
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