![TSMC, Samsung, SK hynix get chip war reprieve TSMC, Samsung, SK hynix get chip war reprieve](https://i0.wp.com/content.fortune.com/wp-content/uploads/2023/10/GettyImages-1501991957-e1697181829369.jpg?fit=%2C&ssl=1)
The Biden administration is on a mission to prevent China from catching up with cutting-edge chips designed by the United States and its allies. But even Washington realizes that the giant that makes the world’s most advanced semiconductors cannot abandon China entirely.
On Friday, leading chipmaker Taiwan Semiconductor Manufacturing Company (TSMC) received The U.S. exemption continues to supply wafer equipment to the company’s Chinese factories.
Taiwan’s Economic Minister Wang Meihua was the first to announce the exemption in briefing met with reporters on Friday but gave no further details, including its duration.
TSMC said in a statement wealth The company has now been authorized to “continue operations in Nanjing” and expects to receive permanent authorization to operate in China soon.
Lucy Chen, vice president of Taiwanese semiconductor research firm Isaiah Research, said the exemption is “good news” for TSMC as it allows the company to continue its expansion plans for 28nm wafers in Nanjing, China. (TSMC Start making 2011 28 nm wafer)
TSMC is the third chipmaker to receive an exemption last week.washington grant indefinite immunity Last Monday, Samsung and SK Hynix continued to supply equipment to their Chinese chip factories. “The most important trade issue for our semiconductor companies has been resolved,” Choe Sang-mok, senior secretary for economic affairs to the South Korean president, told a media briefing.
SK Hynix said in a statement that it welcomed the U.S. decision and would “contribute to the stability of the global semiconductor supply chain.” Samsung did not immediately respond to a request for comment.
TSMC has factories in Nanjing and Shanghai, but neither produces the company’s most advanced chips. Samsung has two factories in China, while SK Hynix has multiple factories in China.
The fact that TSMC and other companies do not make cutting-edge chips in China could explain Washington’s decision to extend the exemption. “The purpose of (Biden’s chip controls) is to limit the transfer of technology to China, not to cause problems for foreign companies doing business in China,” Chip war: the fight for the world’s most critical technology, explain.
Washington may want to keep some foreign companies in China’s chip supply chain. If TSMC, Samsung and other companies are hampered by U.S. sanctions, “demand will shift to local memory factories or semiconductor foundries in China,” Chen said. This, she continued, would give the United States “less control and less visibility” over China’s chip industry.
The chip industry contributes significantly to the economies of South Korea and Taiwan. Last year, chips accounted for nearly 20% of South Korea’s exports. According to Invest in Korea, a Korean trade promotion group.Semiconductor exports are almost a quarter ING estimated in April that the proportion of Taiwan’s GDP in 2022.
Are chip companies unhappy with Biden’s chip regulations?
Companies such as TSMC and Samsung keep most of their high-tech production at home rather than rely on Chinese operations to produce more mature chips.
On the other hand, Chinese companies are not yet able to make these cutting-edge chips, and current U.S. policy is to prevent them from catching up. Last October, the Biden administration enacted sweeping export controls restricting China’s ability to purchase or produce these advanced chips and the equipment used to make them. Washington also persuaded Japan and the Netherlands – two U.S. allies and home to important producers of chipmaking equipment – to similarly restrict exports to China.
Companies receiving U.S. government subsidies from last year’s CHIPS and Science Act are also restricted Expand production scale “Countries of concern” including China have been at least ten years old.
Foreign companies and governments are outraged by provisions of the CHIPS Act, which also include requirements to use union labor, provide affordable child care and share excess profits with the U.S. government. In March, TSMC Chairman Mark Liu complained that the U.S. government’s conditions for funding its planned Arizona factory were “unacceptable.”South Korean officials also stated express confusion The breadth of U.S. chip subsidies.
Semiconductor companies have also warned that expanding chip control would encourage China to invest in its own domestic alternatives. ASML CEO Peter Wennink January warning The U.S. regulations will encourage Chinese companies to produce their own versions of ASML lithography equipment used to make state-of-the-art wafers.
Chinese companies may have made progress in circumventing U.S. rules. Chinese equipment maker Huawei Technologies Co. recently released a new smartphone with a processor just a few years behind cutting-edge technology, despite sanctions banning the company from purchasing said chips. (Although some experts question whether Huawei and its suppliers can continue to produce chips cheaply and at scale).
The Biden administration is reportedly preparing to update its chip export rules and could announce changes as soon as this week Reuters. The updates target a vulnerability exploited by Nvidia and other chipmakers to continue selling advanced artificial intelligence processors to China.
Last year, Nvidia developed less complex version Its premium A100 GPU for the Chinese market complies with US rules. Intel has also developed a processor that meets U.S. standards and is focused on the China market, according to Intel. South China Morning Post.
In August, Nvidia said up to a quarter Its data center revenue comes from China, the chip maker warns “permanent lossIf the expanded rules take effect, the U.S. chip industry will face opportunities.
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