Two global leaders in memory semiconductors, SK Hynix and Samsung Electronics Co., are lobbying the U.S. for a waiver to continue to receive chip equipment for fabs in China.
According to a report from Maeil Business News Korea, the companies hope to receive a similar grace period by the U.S. as was given in October to Samsung, SK Hynix and Taiwan Semiconductor Manufacturing Co. (TSMC). This was a one-year extension to continue to receive chip equipment and other items needed to maintain operations of fabs in China.
Despite this exemption, reports from last year had SK Hynix and potentially Samsung both considering closing or selling its Chinese fabs fearing the problems with the ongoing semiconductor arms race between China and the U.S. would not be solved any time soon.
How the CHIPS Act factors in
Part of the issue is related to the CHIPS and Science Act that was signed into law by Joe Biden in July of last year. The act includes a provision that bans companies from receiving U.S. subsidies and tax credits in chip investments from engaging in advanced chip facility investment in China or any other foreign country of concern for 10 years.
In other words, if Samsung or SK Hynix get subsidies for chip investment in the U.S., they will be unable to carry out additional investments in China for 10 years.
That is problematic because Samsung is investing $17 billion in a fab in Tyler, Texas, but could build up to 11 new chip factories in the state over the next 20 years.
SK Hynix is also planning to spend about $15 billion on packaging manufacturing factory and R&D in the U.S. The company plans to pick a location later this year that will begin mass production in 2025 or 2026, according to reports.
Samsung Electronics also runs factories in Xi’an and Suzhou in China and SK Hynix in Wuxi and Dalian. SK Hynix relied 29.2% of its entire sales on China in the third quarter of last year. China sales at Samsung Electronics also accounts for more than 30% of its entire revenue.
