Shares of South Korean memory chipmaker SK Hynix rose 4% on Wednesday after it confirmed that it had received a one-year exemption from new US restrictions blocking exports of advanced chips and equipment to China.
SK Hynix – the world’s second biggest memory chipmaker by revenue, has a production facility in Wuxi, China, that produces about 13% of the world’s production of DRAM, one of the major types of chips that go in computers, smartphones and other devices, according to TrendForce, the Taiwanese market research group.
Hynix is also taking over Intel’s NAND flash-memory-chip factories in Dalian, according to the Wall Street Journal, which said the company’s statement confirming it had won an exemption was “a sign of Washington’s willingness to offer reprieves that help minimize potential disruption to global semiconductor production.”
The other Korean chip giant, Samsung Electronics, which has facilities in the Chinese cities of Xi’an and Suzhou, has yet to comment, but the news from Hynix suggests it will also win a reprieve, as both US and Korean officials have been saying.
Industry sources said on Tuesday that the US government looked likely to allow the two South Korean memory chip giants operating in China to get restricted goods and services without their suppliers seeking licences.
Such a decision would ease the burden of a new crackdown on the Chinese chip sector, the sources said.
The Biden administration had planned to spare foreign companies operating in China such as Hynix and Samsung from the brunt of new restrictions, but the rules published last Friday failed to exempt such firms, the sources said.
The rules require licences before US exports can be shipped to facilities with advanced chip production in China, as part of a US bid to slow Beijing’s technological and military advances.
Licence Process Could Create Delays
The US had planned to grant licences to supply non-Chinese chip factories on a case-by-case basis, while licences to Chinese chipmakers will face a presumption of denial.
Late on Tuesday, US officials were scrambling to tackle unintended consequences of its export curbs that could inadvertently harm the semiconductor supply chain, people familiar with the matter said.
By late Tuesday, hours before the new restrictions took effect, SK Hynix revealed it had received a letter from the Commerce Department’s Bureau of Industry and Security that ensured the company can supply its facilities in China with the equipment and items needed for one year without meeting additional licensing requirements.
However, vendors cannot support, service or send non-US supplies to such China-based factories without licences, if US companies authorise, direct or request them.
But whether a licence is approved or not, the time it takes to get through the licence process could create delays in shipments and halt production.
A US Commerce Department spokesperson did not directly respond to a request for comment on the authorisations, but said the department hopes to get input from stakeholders about the rules and may consider changes.
- Jim Pollard with Reuters
NOTE: This report was updated on October 12, 2022 with details of SK Hynix getting an exemption from the new US chip export curbs.