Samsung and TSMC, two of the world’s leading chipmakers, are in the spotlight as they seek permanent US licenses to operate their chip plants in China. This move comes in the wake of the Biden administration’s restrictions on chip and chipmaking equipment shipments to China. Here’s a closer look at the unfolding scenario.
- The US Commerce Department has allowed key foreign chipmakers to continue receiving essential US chipmaking tools for their China-based operations.
- This decision extends special authorizations given to chipmakers like Samsung, SK Hynix, and TSMC after the US curbed advanced chip shipments to China.
- The initial export controls aimed to hinder China’s swift progress in AI and military technologies.
- To mitigate the unintentional impacts on US chip production, the Biden administration granted limited special authorizations.
- TSMC expects to receive permanent US authorization for its China operations soon.
- The Biden administration is contemplating further export controls to prevent Chinese companies from accessing American AI chips through overseas units.
The US Commerce Department’s recent announcement has brought relief to several foreign chipmakers, allowing them to continue receiving crucial US chipmaking tools for their operations in China. This decision is an extension of the special authorizations previously granted to these chipmakers, including South Korea’s SK Hynix and Samsung, as well as the Taiwan Semiconductor Manufacturing Co (TSMC). These authorizations were a response to the Biden administration’s move to curb shipments of advanced chips and chipmaking equipment to China in the previous year.
The initial export controls had a clear objective: to slow down China’s rapid advancements in AI and military technologies. However, these rules inadvertently impacted US chip production. To counteract these unintentional effects, the Biden administration granted limited special authorizations, allowing some chipmakers to continue shipping equipment to China. With the recent decision, these chipmakers can now operate their Chinese plants without the constant need to apply for US licenses.
TSMC, a significant supplier of chips for AI and military defense systems in the US, has expressed optimism about the situation. The company anticipates receiving permanent US authorization for its operations in China. This expectation stems from advice from the US Bureau of Industry and Security, which suggested TSMC apply for a validated end-user (VEU) authorization. This would ensure that TSMC consistently has US approvals for its China-based operations.
Furthermore, the South Korean government has confirmed that both Samsung Electronics and SK Hynix will be permitted to supply US chip equipment to their factories in China indefinitely, eliminating the need for separate US approvals.
However, challenges persist. The Biden administration is still grappling with the task of severing China’s access to AI chips. There are considerations to expand export controls, closing loopholes that allow Chinese companies to access American AI chips via overseas units. These units have proven challenging for the US to monitor and regulate. The upcoming export controls might resemble those implemented in August, which restricted shipments of AI chips and chipmaking tools to specific countries in the Middle East and other regions outside China.
The unfolding scenario around chipmakers like Samsung and TSMC seeking permanent US licenses for their China operations highlights the complexities of the global tech supply chain. While the US aims to curb China’s rapid advancements in AI and military technologies, it also recognizes the need to support global chip production. The recent decisions by the US Commerce Department reflect a balancing act, ensuring that technological advancements continue while addressing geopolitical concerns.