New Regulations Announced by the Ministry of Commerce... Samsung and Others in the Crosshairs
The U.S. government has introduced new measures to control exports to China of key components necessary for developing artificial intelligence (AI), such as high-bandwidth memory (HBM) and semiconductor manufacturing equipment. Samsung Electronics, which exports some HBM to China, is expected to face inevitable impacts. The U.S. daily newspaper The Washington Post (WP) described this as "the Biden administration's final blow to slow China's pursuit of self-reliance in advanced semiconductor technology, a critical national security area."
On the 2nd (local time), the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced that certain HBM products will be added to the list of export-controlled items starting from the 31st.
HBM is a high-performance memory created by stacking multiple DRAM chips vertically and is necessary to operate AI accelerators.
The Department of Commerce applied the Foreign Direct Product Rule (FDPR) to this export control. Based on this, even products made in countries other than the U.S. must comply with U.S. export controls if they use U.S.-origin software (SW), equipment, or technology.
The Department of Commerce decided to control products with a 'memory bandwidth density,' the performance unit of HBM, exceeding 2GB per second per ㎟. It stated that all currently produced HBM stacks exceed this standard.
Currently, the HBM market is dominated by SK Hynix, Samsung Electronics, and Micron, raising concerns that domestic companies may be negatively affected by this regulation. Samsung Electronics exports some HBM to China and is expected to suffer some impact from this export control measure. On the other hand, SK Hynix currently supplies all its HBM to the U.S., so it is reported that there will be no immediate significant impact.
However, the Department of Commerce has set exceptions for the application of export controls. When exporting HBM to Chinese subsidiaries of companies headquartered in the U.S. or allied countries, a procedure to apply for exceptions on certain products has been established.
Additionally, the Department of Commerce announced new export control measures on 24 types of semiconductor manufacturing equipment (SME) and 3 types of software tools to block China's advanced semiconductor production. However, companies from countries that operate export controls at a level equivalent to the U.S. do not need to obtain Department of Commerce approval when exporting semiconductor equipment. A total of 33 countries, including Japan and the Netherlands, fall under this category, but South Korea is not included. Accordingly, it is expected that exports of some semiconductor equipment and parts made in South Korea to China may also be restricted.
Furthermore, the Department of Commerce announced 140 companies related to China's military modernization and prohibited the export of advanced semiconductors and related equipment to these companies. Most of these companies are in China, but two companies located in South Korea, 'ACM Research Korea' and 'Empyrean Korea,' were included.
U.S. Secretary of Commerce Gina Raimondo described the export control measures as "groundbreaking and comprehensive," explaining that they are "the strongest measures implemented to degrade China's ability to produce cutting-edge semiconductors used for military modernization."
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