May 24, 2024

American officials want South Korea to restrict the flow of equipment and technologies for making high-end logic and memory chips to China, according to people familiar with the matter. Those include logic chips more advanced than 14-nanometer and a type of memory called DRAM beyond 18nm, one of the people said, asking not to be identified because the discussions are private. That would be consistent with a set of measures the US Department of Commerce first announced in 2022. 

American officials discussed the issues in depth with the government of South Korean President Yoon Suk Yeol in March, the people said. While the US is trying to reach an agreement before a G7 summit in mid-June, Seoul officials are debating whether to satisfy the US request, in part because China remains a key trading partner. 

Washington’s request of South Korea has not been detailed before. This comes on top of the new US push to get allies to limit servicing of semiconductor equipment for Chinese firms and restrict exports of spare parts and chip chemicals to China.

Bloomberg News has reported the US pressed allies, including South Korea and Germany, to tighten curbs on China’s access to their technology. Korea plays a leading role in producing semiconductors and providing spare parts for chip-making equipment.

The timeline could slip. South Korea, Japan and US officials are planning to meet in late June to discuss cooperation on advanced technology and supply chains, according to the people. 

South Korean officials are wary of potential penalties that export controls may trigger from Beijing when major firms such as Samsung Electronics Co. and SK Hynix Inc. still operate in China, Seoul’s largest trading partner.

The US Department of Commerce’s Bureau of Industry and Security did not respond to requests for comment. South Korea’s Trade Ministry declined to comment. On Wednesday, China’s government called on Seoul to avoid politicizing economic issues. “We hope that the ROK will make the right judgments and independent decisions,” Foreign Ministry spokesman Wang Wenbin told reporters during a regular briefing.

With help from Samsung and Hynix, South Korea makes some of the world’s most advanced logic and memory chips. While its chip equipment suppliers are not as prominent as the US’s Applied Materials Inc. or the Netherlands’ ASML Holding NV, local gear makers including Hanmi Semiconductor Co. and Jusung Engineering Co. still make up an important part of the Asian country’s semiconductor ecosystem. 

South Korea has the biggest market share of memory chips in China and it is the second largest provider of silicon wafers for Chinese firms after Japan, according to a February report from the Korea Institute for International Economic Policy. For chip-making materials and parts, South Korea is also the second largest exporter to China after Japan, the report said. 

Meanwhile, South Korea is tapping into a multinational framework to review export controls for sensitive products like semiconductor-related equipment, the country’s trade minister Cheong Inkyo told reporters last month, an approach that may complicate US efforts to curtail China’s influence on technology supply chains. It will take months for South Korea to implement any curbs, the official added. 

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