US allows Samsung, SK Hynix to keep getting US tools in China

WASHINGTON (Reuters) -The United States gave permission for South Korea’s SK Hynix and Samsung to keep receiving certain U.S. chipmaking tools at their Chinese plants, the Commerce Department said in a statement on Friday.

The authorization allows them to continue their Chinese chipmaking operations without the headache of applying for U.S. licenses to get new equipment, after new rules issued last October curbed Chinese chipmakers’ access to the coveted tools.

The October 2022 rules restricted shipments of advanced chips and chipmaking equipment to China as part of a U.S. bid to slow China’s technological and military advances.

The U.S. then scrambled to give foreign chipmakers special authorizations to avoid the unintended consequences of those rules hitting their production. Friday’s release formalizes and extends those authorizations.

Taiwan Semiconductor Manufacturing Co (TSMC) said in a statement on Friday that it has been authorized to continue operate in Nanjing and is in the process of applying for a permanent authorization for its operations in China, which it expects to receive.

Samsung Electronics makes about 40% of its NAND flash chips at its plant in Xian, China, while SK Hynix makes about 40% of its DRAM chips in Wuxi and 20% of its NAND flash chips in Dalian.

The companies together controlled nearly 70% of the global DRAM market and 50% of the NAND flash market as of the end of June, data from TrendForce showed.

(Reporting by Karen Freifeld, Chris Sanders and Alexandra Alper; editing by Susan Heavey, Doina Chiacu and Jonathan Oatis)