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Analysts in the United States suggest that if former President Donald Trump returns to the White House, the U.S. government’s regulatory exemption for South Korean semiconductor companies’ factories in China could be put to the test again. Depending on the outcome of the U.S. election in November, South Korean semiconductor companies, which narrowly escaped the Biden administration’s semiconductor regulation against China, may face the “Chinese business risk” again.
On the 22nd (local time), Bloomberg News reported that last year the U.S. government indefinitely suspended export the restriction of semiconductor equipment for the Chinese factories of Samsung Electronics and SK Hynix’. However, there is no guarantee that this policy will continue if former President Trump wins the U.S. election. Former President Trump has already declared that he would embark on “erasing” Biden’s policies in a wide range of areas, including electric vehicle policy.
Last year, the U.S. Department of Commerce indefinitely suspended the export restriction of equipment to South Korean semiconductor companies’ factories in China by applying the “Validated End-User (VEU)” approach. The VEU is a type of “integrated license” that allows companies like Samsung Electronics or SK Hynix to freely import equipment without separate permission, as long as they submit to the U.S. Department of Commerce a list of semiconductor equipment to be used. The Biden administration made this decision considering a complex set of issues, including U.S.-Korea relations and the semiconductor supply issues in China for U.S. companies. However, Bloomberg noted that this could be reversed if the Trump administration steps in.
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Bloomberg highlighted that SK Hynix’s Dalian factory, which was acquired from Intel, is caught in a complex situation amid U.S.-China tensions. SK Hynix received the assets of the Dalian NAND flash factory as the first step after the acquisition agreement in 2020, but the second acquisition process is expected to be completed only in 2025.
Masahiro Wakasugi, a Bloomberg Intelligence researcher, analyzed, “Considering the uncertainty over the U.S. election and subsequent U.S. policies, despite the U.S.’s concession last year, it is not reasonable for (SK Hynix) to expand the production capacity of the Dalian factory.” Wendy Cutler, vice president of the Asia Society Policy Institute, predicted, “Korean companies will have to make difficult decisions while weighing risks, pressures, and opportunities coming from both the U.S. and China.”
By. Sharon Lee
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