White House ban on US chip cash going into China ruffles South Koreans
A requirement barring recipients of America's $53 billion CHIPS subsidies from expanding their operations in China for a period of 10 years is proving to be a sticking point for the South Koreans., the nation's Minister of Trade, Industry, and Energy has expressed concerns over the so-called guardrail clause outlined by the US Commerce Department this week.
The CHIPS and Science Act was initially billed by its proponents as a way to bolster US semiconductor manufacturing capacity and rebalance the global supply chain in the wake of the COVID-19 pandemic and ensuing semiconductor shortage. However, with the addition of the guardrail provision [], it's clear the Biden Administration plans to use the $39 billion in funds laid out by the bill to convince chipmakers to back US efforts to stifle the Chinese chip industry.
Specifically, the rules require recipients to forgo investments and business deals with"a foreign entity of concern" over the next decade. And for most chipmakers, that means China and what little Russia has of a chip industry. Silicon slingers who flout these rules will be required to return the funds, which for a company like TSMC or Samsung will likely amount to billions of dollars, depending on the scope of their planned US investments.
In response to the rules, South Korea's Ministry of Trade, Industry, and Energy reportedly said the agency would consult with the appropriate US authorities to ensure the nation's interests are reflected in the agreement. This isn't the first time South Korea has found itself at odds with the Biden Administration on the issue. Last fall, Samsung and SK Hynix, two of the largest memory manufacturers, found themselves in the crosshairs of US restrictions on the export of equipment and software used to produce DRAM chips below 18nm, NAND silicon with more than 128 layers, or logic processors below 14nm.
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