Samsung and SK Cannot Increase China Production by More Than 5% if Receiving US Semiconductor Law Subsidies

Samsung Electronics and SK Hynix will not be allowed to expand their semiconductor production capacity in China by more than 5% over the next 10 years if they receive investment subsidies under the U.S. CHIPS and Science Act (CSA).

On the 21st (local time), the U.S. Department of Commerce released detailed regulations of the guardrail provisions designed to ensure that CSA subsidies are not used in ways that undermine national security, through the Federal Register and other channels.

Companies receiving subsidies must return the full amount if they engage in a 'material expansion' of semiconductor production capacity in China over the next 10 years. The Department of Commerce defined 'material expansion' as a quantitative increase in production capacity in the regulations released that day. For advanced semiconductors, production capacity cannot be expanded by more than 5%, and for previous-generation legacy semiconductors, production capacity cannot be increased by more than 10%.

The semiconductors currently produced by Samsung Electronics and SK Hynix in China fall under the category of advanced semiconductors.