U.S. Likely to Extend Grace Period for Korean Chipmakers

The U.S. government is expected to extend a grace period for Korean chipmakers that have factories in China before they face penalties under new protectionist legislation called the CHIPS and Science Act.

The Wall Street Journal on Sunday reported that Under Secretary of Commerce Alan Estevez told a gathering of the U.S. Semiconductor Industry Association that Washington intends to "allow top semiconductor manufacturers from [Korea] and Taiwan to maintain and expand their existing chip-making operations in China without U.S. reprisals." 

The legislation from last October virtually bans semiconductor makers that benefit from U.S. subsidies from exporting equipment to China to improve their facilities there, but Samsung, Hynix and Taiwan's TSMC won a one-year grace period. 

Trade, Industry and Energy Minister Lee Chang-yang told reporters last month, "We expect a significant extension even after October." But when Beijing retaliated by banning U.S. memory chipmaker Micron, calls increased in Washington for a tougher stance. 

Michael McCaul, head of the U.S. House Foreign Relations Committee and Michael Gallagher, head of the U.S. House Select Committee on Strategic Competition with China, told U.S. Commerce Secretary Gina Raimondo earlier this month to cooperate with the Korean and Japanese governments to ensure Korean and Japanese chipmakers do not end up gaining an advantage from Micron's misfortunes. 

But Estevez' remarks suggest that the U.S. government sees Korean chip equipment exports as a separate issue. The Department of Commerce could announce the extended grace period in July or August.