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Tech war: relief as South Korean semiconductor giants dodge ‘worst-case scenario’ in US proposal on chip output
- Korean chip makers avoided having to stop all production expansion, innovation in China, under new proposed rules by the US, say analysts
- The US wants to ban recipients of its Chips and Science Act from expanding chip production in China or other ‘countries of concern’ by more than 5 per cent for next 10 years
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South Korea’s two major semiconductor chip makers may get some relief from the United States’ proposed changes to the Chips and Science Act aimed at curbing investment in China, allowing Korean firms some wiggle room in production, analysts have said.
Korean manufacturers had avoided the “worst-case scenario” of stopping all production expansion and innovation in China, said Kim Yang-paeng, an analyst at the Korea Institute for Industrial Economics and Trade.
“However, the future of Korea-invested facilities in China still remains uncertain, depending on how the US deals with China in the future,” he told This Week in Asia.
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Under the new proposal that the US Department of Commerce announced on Tuesday, recipients of funding under the US’ Chips and Science Act will be banned from expanding chip production in China or other “countries of concern” by more than 5 per cent for the next 10 years.
The proposed “guardrails” are in place to ensure that technology and innovation funded by the Act are not used for “malign purposes by adversarial countries such as China, Russia, Iran and North Korea against the United States or its allies and partners”, the department said.
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