The United States has announced a new semiconductor export control package against China, which includes curbs on high-end chips for artificial intelligence (AI) likely to affect the South Korean industry.
The Commerce Department's Bureau of Industry and Security unveiled the package on the Federal Register, including restrictions on exports of high bandwidth memory (HBM) chips.
Two South Korean companies -- Samsung Electronics (KS:005930) and SK hynix -- along with Micron Technology (NASDAQ:MU) -- control the global HBM market.
The package comes as President Joe Biden is set to leave office on Jan. 20 with President-elect Donald Trump expected to adopt a tough policy stance on China. It is in line with Washington's efforts to limit China's access to key technologies on national security grounds, reports Yonhap news agency.
"This action is the culmination of the Biden-Harris Administration's targeted approach, in concert with our allies and partners, to impair the PRC's ability to indigenize the production of advanced technologies that pose a risk to our national security," said Secretary of Commerce Gina Raimondo. PRC stands for China's official name, the People's Republic of China.
For the latest package, the BIS applied Foreign Direct Product Rules, where a product, manufactured in a foreign country, also falls under restrictions if it is made using U.S. technology, software, or tools.
The HBM curbs -- with a compliance date of December 31 -- target chips with a memory bandwidth density greater than 2 gigabytes per second per square millimeter, according to the BIS.
The curbs could impact Samsung as it exports some of its HBM products to China, while little immediate impact is expected for SK hynix as the company exports all of its HBM products to the United States, according to industry observers.
The BIS warned that curbs on HBM commodities are critical for AI applications that it said could allow advanced military and intelligence applications, lower the barriers to entry for non-experts to develop weapons of mass destruction, support offensive cyber operations and assist in using mass surveillance to commit human rights abuses.
The Commerce Department also introduced new controls on 24 varieties of SME and three software tools designed or manufactured for developing or producing semiconductors. It added 140 entities to its "Entity List," linked to China's military modernization.
The department established new Foreign Direct Product controls for certain SME items that originate in foreign countries, but are produced with U.S. technology, software or tools -- a move that could affect Korean-made chipmaking equipment exports.
Japan, the Netherlands and 31 other countries, which implement export controls equivalent to those of the U.S., are excluded from certain SME license requirements for exports, but South Korea is not among those countries.
Among the 140 entities newly added to the export control list, two are Korea-based companies -- ACM Research Korea Co. and Empyrean Korea.
China's foreign ministry vowed to take "resolute measures" in response to the fresh export curbs.
"We have reiterated our position on this several times. China strongly objects to the U.S. overextending the definition of national security, abusing export controls, and maliciously blocking and suppressing China," ministry spokesman Lin Jian said at a briefing.
"This kind of behavior seriously violates the laws of market economy and the principle of fair competition, disrupts international economic and trade order, destabilizes global industrial and supply chains, and will eventually harm the interests of all countries," he added.
Read also| China Criticizes US Arms Sales to Taiwan, Warns of Severe ConsequenceRead also| Zelensky Presents New Conditions for Ceasefire, Moscow Remains Silent
