Samsung and SK Hynix can continue their chipmaking operations in China

Forward-looking: While the US and China are still clashing over silicon supremacy and economic sanctions against the Middle Kingdom’s technology industry, South Korea has won some important concessions through Washington diplomacy. The Asian giant will continue to do business and make chips in China, at least for now.

Samsung and SK Hynix, two of South Korea’s most prominent technology players, have been excluded from the US sanctions imposed against Beijing’s technology prowess. The two companies are officially allowed to keep making chips in China and to bring their advanced chipmaking equipment into the neighboring country.

Created after the merging of Hyundai Electronics and SK Group, the third largest conglomerate in South Korea, SK Hynix is the world’s second-biggest memory manufacturer after Samsung. The two corporations have their own semiconductor plants in China, which should theoretically be subject to sanctions imposed by the US government against exporting the latest and greatest chip manufacturing machines to the Asian country.

South Korea is one of the US’s major allies in Asia, and Washington is trying to strengthen its influence in the area to keep pressure on China high. Therefore, Seoul could have tried to take advantage of its leverage over the US to try and avoid hurting two of South Korea’s most important technology companies.

The diplomatic and lobbying efforts seem to have paid off. According to SK’s senior presidential secretary for economic affairs Choi Sang-mok, Washington has officially approved an exemption for Samsung and SK Hynix chipmaking activities in China. Both corporations can continue using and upgrading their manufacturing plants in the country, for a seemingly indefinite amount of time.

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SK Hynix and Samsung welcomed the decision, saying that it will contribute to the stabilization of supply chains for advanced technology products. As the world’s economic outlook improves, demand for non-GPU chips is expected to grow again. A more stable supply chain would be instrumental in keeping prices in check.

The exemptions coming from Washington could also work in favor of the overall diplomatic efforts between the US and China. Chinese media have welcomed the decision, which was revealed on the same day that several US senators were visiting China to meet President Xi Jinping. The rumored meeting between Jinping and US President Joe Biden could soon turn into a reassuring reality.