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South Korea Asks US to Review China Curbs in Chips Act Funding

South Korea’s Samsung and SK Hynix, the world’s top two makers of memory chips, have invested billions of dollars in chip factories in China

Memory chips made by South Korean semiconductor supplier SK Hynix are on a circuit board. Photo: Reuters
The US is seeking to block Chinese firms' access to artificial intelligence chips that can be used on unmanned intelligent combat systems, sources say. Photo: Reuters.


South Korea has asked Washington to review its criteria for new semiconductor subsidies, concerned over the impact of rules to limit chip investment in countries such as China, a US public filing showed.

In March, the US commerce department proposed rules to prevent China and other countries it deems to be of concern from tapping into funds of $52 billion earmarked for semiconductor manufacturing and research under the so-called CHIPS Act.

A leading chipmaker and major investor in the US chip sector, South Korea asked the United States to review the rule that prevents recipients of US funding from building new facilities in such countries, beyond 5% of existing capacity.


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“The Republic of Korea believes ‘guardrail provisions’ should not be implemented in a manner that imposes an unreasonable burden on companies investing in the United States,” South Korea said, using its official name.

The filing gave no further details, but the South’s Yonhap news agency said Seoul had asked to raise the limit to 10%.

The United States has said the incentives aim to help restore America’s leadership in semiconductor manufacturing, boost employment and ensure economic and national security.

South Korea’s Samsung and SK Hynix, the world’s top two makers of memory chips, have invested billions of dollars in chip factories in China.

Samsung is building a chip plant in Texas that could cost more than $25 billion.


Protecting investments

In its comments, Samsung Electronics sought clarification of the proposed rule to ensure that investments in the US chip-making sector were “not unduly and unintentionally restricted,” a filing showed.

SK Hynix also made comments but the public version gave no details.

Its parent SK Group, which plans to invest $15 billion in the US chip sector, some for an advanced chip packaging factory, has said it is considering applying for funding.

“Potential CHIPS Act funding recipients have numerous existing legacy facilities in China,” an industry group, the Semiconductor Industry Association, said.

“It is critical for these companies to be able to protect their past investments in these facilities by ensuring they remain commercially viable.”

The United Auto Workers (UAW) union has said funding applicants should be ruled ineligible if they did not agree to allow union organising.

“The US government should not be in the business of funding union-busting employers,” it said in a filing on Tuesday.

The commerce department began accepting subsidy applications for leading-edge chip facilities in March. On June 26, it will open applications for “current-generation, mature-node and back-end” production facilities.


  • Reuters, with additional editing by Vishakha Saxena


Also read:

China’s Micron Ban Adds to Asian Chipmakers’ Investment Woes

South Korea Says New US Rules Won’t Shut Its China Chip Plants

China Calls on WTO to Review Chip Export Curbs Led by US

TSMC Seeks up to $15 Billion in US CHIPS Act Subsidies


Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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