US imposes new semiconductor export curbs on China, impacting South Korean industry

US targets China’s chip industry with new restrictions

The United States has unveiled a new semiconductor export control package aimed at restricting China’s access to advanced technologies, including key components for artificial intelligence (AI).

The measures, announced by the US Commerce Department’s Bureau of Industry and Security (BIS), specifically target high-bandwidth memory (HBM) chips, a crucial component for AI applications.

The new restrictions are part of Washington’s ongoing efforts to limit China’s ability to produce advanced technologies that pose a national security risk, ahead of President Joe Biden’s departure from office on January 20.

The package includes restrictions on HBM chips with a memory bandwidth density greater than 2 gigabytes per second per square millimeter.

These chips are vital for AI applications, which have military and intelligence uses, including enhancing cyber capabilities, developing weapons of mass destruction, and conducting surveillance. The BIS has set a compliance deadline of December 31 for companies to adhere to these new curbs.

Secretary of Commerce Gina Raimondo said, “This action is the culmination of the Biden-Harris Administration’s targeted approach, in concert with our allies and partners, to impair the PRC’s ability to indigenize the production of advanced technologies that pose a risk to our national security.”

While the impact on South Korea’s semiconductor giants is mixed, industry analysts suggest that Samsung may face challenges as it ships some of its HBM products to China, whereas SK Hynix could be less affected due to its focus on exporting HBM chips to the US In addition to the HBM restrictions, the US also imposed controls on 24 types of semiconductor manufacturing equipment (SME) and three types of software tools for semiconductor production.

These new controls include the application of Foreign Direct Product (FDP) rules, which extend US restrictions to products made in foreign countries using US technology.

The BIS also added 140 Chinese entities, linked to the country’s military modernization, to its “Entity List,” restricting their access to critical US technologies. Notably, two South Korean companies—ACM Research Korea Co. and Empyrean Korea—were added to the list.

The new controls could impact South Korea’s exports of chipmaking equipment, as the country is not included in an exemption for certain nations, such as Japan and the Netherlands, which align their export controls with the US

In response, China’s foreign ministry strongly condemned the US sanctions.

Lin Jian, the ministry’s spokesperson, told a press briefing, “We have repeatedly made clear our position on this issue. China firmly opposes the US’ overstretching the concept of national security, abusing export controls, and maliciously blocking and suppressing China.”

“This type of behaviour seriously violates the laws of market economy and the principle of fair competition, disrupts international economic and trade order, destabilizes global industrial and supply chains, and will eventually harm the interests of all countries,” he added.

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