![Flag of USA on a processor, CPU Central processing Unit or GPU microchip on a motherboard. [SHUTTERSTOCK]](https://usercontent.one/wp/www.businesstelegraph.co.uk/wp-content/uploads/2023/09/Korean-chipmakers-breathe-sigh-of-relief-over-US-039guardrails039.jpg?media=1731584300)
Flag of USA on a processor, CPU Central processing Unit or GPU microchip on a motherboard. [SHUTTERSTOCK]
The final version of the U.S. national security guardrails erased some of the uncertainties surrounding Korean chipmakers’ operation in China but didn’t fully reflect the suggestions made by the Korean government back in March when the initial version was revealed.
The U.S. Department of Commerce said on Friday that the guardrails of the U.S. Chips and Science Act will bar companies receiving subsidies under the act from expanding semiconductor manufacturing capacity for advanced facilities in “foreign countries of concern” for 10 years, referring the countries like China and Russia.
The department defined material expansion as increasing a facility’s production capacity by “more than five percent” based on the wafer input. The rule also prohibits the expansion of production capacity for legacy facilities beyond 10 percent.
The department removed an initially proposed $100,000 spending limit on investments in advanced capacity in China as an industry group of chipmakers, including Samsung Electronics, has expressed concern over the impact of such restrictions on future business operations, according to Bloomberg.
Korea’s Ministry of Trade, Industry and Energy back in March had proposed upping the production expansion threshold from the initial five percent to 10 percent on advanced facilities, but it wasn’t reflected in the newest version.
“One of the Biden-Harris Administration’s top priorities … is to expand the technological leadership of the U.S. and our allies and partners,” Secretary of Commerce Gina Raimondo was quoted as saying in a press release. “These guardrails will protect our national security and help the United States stay ahead for decades to come.”
Korea’s Industry Ministry expects that following the finalization of the guardrails, “normal” business activities of Korean firms, which pose no security concerns, will be guaranteed.
“Going forward, we will continue cooperation with the U.S. government to strengthen global supply chains for semiconductors and guarantee our enterprises’ investment and business activities,” the ministry said in a press release.
The guardrails were first proposed in March to “ensure technology and innovation funded by the Chips and Science Act is not used for malign purposes by adversarial countries against the United States or its allies.”
Korea’s Industry Ministry on Friday evaluated positively that the measurement of wafer input, which gauges the manufacturing capacity, will be done annually instead of the initially proposed monthly which is expected to give more leeway for chipmakers considering the seasonal factors.
In Seoul, Korea’s Industry Minister Bang Moon-kyu met with U.S. Deputy Secretary of Commerce Don Graves on Friday and asked for the concerns among domestic chipmakers to be addressed, according to his office.
Graves told Yonhap News Agency on Thursday that his government understands the concerns and Washington “will do everything” to ensure that South Korean firms are able to continue their legitimate business.
BY JIN EUN-SOO, YONHAP [jin.eunsoo@joongang.co.kr]
