US scrambles to prevent export curbs on China chips from disrupting supply chain
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The US plans to review licences for non-Chinese factories in China hit by the new restrictions on a case-by-case basis.
PHOTO: REUTERS
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OAKLAND, California - The United States is scrambling to tackle unintended consequences of its new export curbs on China's chip industry that could inadvertently harm the semiconductor supply chain, people familiar with the matter said.
Hours before a new restriction took effect, South Korean memory chipmaker SK Hynix said it got authorisation from the US to receive goods for its chip production facilities in China without additional licensing imposed by the new rules.
Samsung Electronics was granted a one-year exemption from the new rules licensing rules, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
Taiwan Semiconductor Manufacturing Company (TSMC) secured a one-year licence to continue ordering American chipmaking equipment for its expansion in China, Nikkei Asia said on Thursday.
The Biden administration had planned to spare foreign companies operating in China such as SK Hynix and Samsung Electronics from the brunt of the new restrictions, but the rules published on Oct 7 did not exempt such companies.
On Thursday, China’s top trade group for the chip sector said it was “disappointed” by recent US export controls and warned they could put more stress on global supply chains.
The China Semiconductor Industry Association said in a statement that it hoped the US government would “adjust the course of action” and “return to the well-established framework of the World Semiconductor Council (WSC) and the Government/Authorities Meeting on Semiconductors (Gams)”.
The WSC and Gams are two global trade forums, established in 1996 and 1999 respectively, where member regions discuss development and policy for the chip sector.
Part of a US bid to slow China’s technological and military advances, the new rules if enforced broadly could bar research labs and commercial data centres’ access to advanced AI chips, prevent Chinese chip fabs from purchasing critical manufacturing equipment, and force US nationals working at advanced Chinese chip companies to resign.
And as of midnight Tuesday, vendors also could not support, service and send non-US supplies to the China-based factories without licences if US companies or people are involved.
As a result, even basic items such as light bulbs, springs, and bolts that keep tools running may not have been able to be shipped until vendors are granted licences. And without the minute-by-minute support the foundries need, they could begin shutting down, one source said.
"Our discussions with the US Department of Commerce led to an approval to supply equipment and items needed for development and production of Dram (dynamic random-access memory) semiconductors in Chinese facilities without additional licensing requirements," SK Hynix said in a statement.
The company said the change would help avoid disruptions to the supply chain and that the authorisation was for a year.
Another source said the temporary fix was until a longer-term solution could be worked out.
A Commerce Department spokesman did not directly respond to a request for comment on the authorisations but said the department hopes to get input from stakeholders about the rule and may consider changes.
A White House spokesman also did not respond to a request for comment.
"Unless the authorisation was issued, a variety of equipment and other suppliers would have had to pull their personnel from the fabs in China," one of the sources said.
The US planned to review licences for non-Chinese factories in China hit by the new restrictions on a case-by-case basis, but even if approved, that could create delays in shipments. Intel operates chip factories in China.
Chinese chip facilities are not expected to get any reprieve. REUTERS
