U.S.’ restriction on SK hynix plan in China ‘legitimate’: U.S. trade chief

November 22, 2021

The United States’ recent restriction on South Korean chipmaker SK hynix Inc.’s plan to bring advanced equipment to a Chinese factory was made out of “legitimate concerns,” and more such moves could be possible, Washington’s top trade official has said.

U.S. Trade Representative (USTR) Katherine Tai made the remarks in her recent radio interview with CBS, a Seoul-based broadcaster, which aired on Monday. She visited South Korea for a four-day run from Thursday.

“I am aware that the technology in question is highly sensitive, and that there are legitimate concerns about the risks to national security in terms of where this technology ends up,” Tai said.

SK hynix had planned to install some of the new extreme ultraviolet lithography (EUV) machines by Dutch firm ASML, to its factory in Wuxi, China, to renovate its factory and to produce memory chips more efficiently. But Washington has barred it from shipping the equipment to China amid an intensified Sino-U.S. rivalry, according to officials.

“It is important for us to work with our partners and our allies in particular, on matters of shared economic and national security. And I also want to acknowledge that we consider Korea to be one of our most important national security partners,” Tai added.

Asked if any other items could also come under such regulations down the road, Tai said, “Yes when it comes to matters of national security. National security includes military and defense concerns, but it can also be broader.”

Earlier in the day, SK hynix CEO Lee Seok-hee said his company will respond to the issue “wisely while cooperating with interested parties.”

Tai also stressed cooperation with South Korea to address global supply chain challenges, particularly in the semiconductor sector.

In September, Washington asked major chipmakers and automakers to share business information, and Samsung Electronics Co. and SK hynix submitted their business information earlier this month.

The U.S. has said that the process was voluntary, but also said it had tools to make the businesses submit such information if necessary.

“The request for information is a part of the U.S. government’s effort to try to identify the bottlenecks because our partners in industry and in governments have shared with us and we’ve experienced ourselves that there are information gaps about where the problems are in the supply chain through production and also among the customer base,” Tai said.

Asked if the request was an one-off occurrence, Tai said she was “optimistic” and the two nations have “the opportunity and the tools to resolve the larger problem.”

Earlier, U.S. Commerce Secretary Gina Raimondo said that the request was “inevitable” under “unprecedented” circumstances of a global supply shortage.

During a meeting held on Friday, South Korea’s Trade Minister Yeo Han-koo and Tai agreed to establish new dialogue channels to boost cooperation in supply chains and other major trade issues.