Samsung Electronics has received a temporary exception allowing it to continue producing memory-chips in China.
Key Details
- The company’s Chinese chip-making facilities can continue production, at least on a temporary basis.
- Regulations from the U.S. released last week restricted export of chips to China.
- Samsung has been given permission to continue operating existing facilities but is not permitted to export prohibited chips, the Associated Press reports.
- The U.S. Commerce Department Bureau of Industry and Security is set to hold a public briefing on the exception Thursday.
Why it’s news
Recent regulations from the U.S. have significantly affected the global chip market.
Policies from the Biden administration including the Chips & Science Act and others encourage chip production in the U.S., restrict exports of certain chips used in artificial intelligence, and restrict the sale of semiconductor equipment to Chinese companies.
Following the announcement of these regulations, top Asian chip stocks fell. Samsung Electronics and Tokyo Electron stocks fell, but the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing slid the most at 8.3%.
Restricting sales of semiconductor equipment to Chinese companies will likely affect Chinese manufacturing. Most semiconductor equipment is controlled by the U.S. and allies. Without support from these industries, China will struggle to continue its manufacturing, Bloomberg reports.
Since the regulations went into effect, Beijing has spoken out against the export controls saying that it will have a negative effect on the global economy and “isolate and backfire” on the U.S. The new policies make it difficult for China to gain access to advanced computing chips.
The regulations are part of a growing strategy from the U.S. to increase security around semiconductor chips which are needed for nearly every aspect of daily life.
Backing up a bit
Other White House policies to draw chip production to the U.S. seems to be working so far.
Micron, one of the largest U.S. chipmakers, plans to invest $15 billion in a new factory located in Boise, Idaho. The company recently held a groundbreaking ceremony.
Construction on Micron’s new factory will begin in 2023. When completed, it will be the largest chipmaking cleanroom, or fabrication room, in the U.S. at 600,000 square feet.
By 2025, parts of the factory will be operational and the factory will continue to expand in phases. When completed, the facility is estimated to create 17,000 jobs.
Companies like IBM and Intel are also investing in new U.S. locations.
