The U.S. government is exploring the possibility of revoking the waivers that allow American companies to sell chip manufacturing equipment to Chinese semiconductor firms like Samsung, TSMC, and SK hynix. This move is part of the broader strategy to restrict advanced technology transfers to China and maintain a competitive edge in the global semiconductor market.
Jeffrey Kessler, the Under Secretary of Commerce for Industry and Security, discussed this proposal at a recent House subcommittee hearing. Reports from the Wall Street Journal and Reuters suggest that this could significantly impact the ability of these companies to source essential equipment for their Chinese manufacturing facilities.
Currently, manufacturers like TSMC, Samsung, and SK hynix rely on equipment from U.S. firms to produce chips, including machines for etching and deposition, which are essential for creating semiconductor components. The equipment, which is not as cutting-edge as EUV (extreme ultraviolet) lithography tools, has been allowed to be exported to China under U.S. waivers. However, these waivers could soon be rescinded, which would complicate their ability to continue operations in China without facing regulatory hurdles.
Despite the potential impacts, the change is not yet final. Both the Wall Street Journal and Reuters report that while the idea of rescinding these waivers is being considered, no formal decision has been made. The Biden administration is balancing this decision carefully, as it could escalate trade tensions with China and create difficulties in negotiations over other critical issues, such as rare earth minerals. There are also concerns about how this might affect U.S. relations with South Korea and Taiwan, key allies in the tech sector.
One reason behind the potential revocation is the U.S. government’s worry that excessive restrictions on U.S. equipment sales could actually bolster China’s domestic semiconductor industry. While some advanced technologies, like EUV scanners, remain highly controlled, other equipment used in chip manufacturing is less restricted. As a result, Chinese firms like ACM Research, AMEC, and NAURA Group have seen significant revenue growth, with some growing by as much as 45% in 2024, as they develop their own capabilities to compete with giants like SMIC (Semiconductor Manufacturing International Corporation).
The situation is further complicated by the U.S. and China’s ongoing trade dispute over rare earth minerals. While China has imposed a six-month expiration period for rare earth export licenses, U.S. officials have pushed for an arrangement that ensures these materials are supplied upfront. Kessler has been vocal about the need to strengthen U.S. alliances to prevent adversaries from advancing their technological capabilities too quickly. However, with tensions running high, the future of these waivers remains uncertain.