AsianFin -- A report on Friday raised more concerns over the Trump administration’s semiconductor curbs on China, which could undermine the preliminary agreements aiming to ease trade war between the world’s top two economies.
Credit：Xinhua News Agency
South Korean chipmakers--Samsung Electronics and SK Hynix as well as Taiwan Semiconductor Manufacturing Company Limited (TSMC) this week were informed by Jeffrey Kessler, head of the Commerce Department unit in charge of export controls, that the U.S. official wants to revoke waivers that allow these companies to access American technology in China, the Wall Street Journal reported on Friday, citing people familiar with the matter.
The aforementioned three major Asian chipmakers now enjoy blanket waivers allowing their current operations in China to import American chip-making equipment without having to seek a separate U.S. license each time. Kessler described the action to cancel such waivers as part of the Trump administration’s crackdown on critical U.S. technology going to China, according to the report.
A closely watched gauge of chipmaker retreated following the the report. The PHLX Semiconductor Index (SOX), a Philadelphia Stock Exchange capitalization-weighted index composed of the 30 largest U.S. companies primarily involved in the design, distribution, manufacture, and sale of semiconductors, dropped as much as 2% before closing more than 0.7% lower on Friday.
U.S.-traded shares of TSMC, the world’s largest contract chipmaker, dropped up to 2.5% and finished nearly 1.9% lower. Nvidia Corporation, the leading artificial intelligence (AI) chip company and one of TSMC’s major customers, saw its stock fell 1.1%.
The reported revocation could disrupt the global industry as U.S. and China officials earlier this month settled a framework through their trade talks from June 9 to 10 in London. But White House officials later Friday reportedly played down the move.
They said the action isn’t a new trade escalation but a move designed to make the licensing system for chip equipment similar to what China has in place for rare-earth exports. The U.S. and China continue to make progress on completing the agreement they reached in London and negotiating on trade, according to the officials.
China and the United States have agreed in principle the framework for implementing consensus between the two heads of state during their phone talks on June 5, as well as those reached at Geneva talks, China’s state news agency Xinhua cited Li Chenggang, China international trade representative with the Ministry of Commerce and vice minister of commerce.
U.S. Commerce Secretary Howard Lutnick on June 10 said in a CNBC interview that Beijing will “approve all applications for magnets from United States companies right away.” Lutnick, one of the U.S. negotiators during the trade talks in London, said the takeaway from the negotiations was that “they set up the Geneva truce.”
China’s slowing-rolling rare earth exports drew U.S. retaliation including a crackdown on visas for Chinese students at U.S. universities, according to Lutnick. But the phone between Trump and Chinese President Xi Jinping a week earlier “changed everything,” said the Secretary.
Trump in a social media post on June 11 announced that a trade deal with China "is done, subject to final approval", and under the deal, China will supply rare-earth minerals and magnets “up front,” in return, U.S. will “provide to China what was agreed to, including Chinese students using our colleges and universities.” Trump didn’t provide details of terms and just described the relationship between two countries as “excellent.”
U.S. Commerce officials last week were said to weigh new export limits on semiconductors, including cutting off sales China of a wider swath of chip-making equipment. Such a reported move would have covered equipment used to make everyday semiconductors, expanding beyond existing export limits on equipment for producing advanced chips, and if carried out, the restrictions could disrupt supply chains for smartphones and cars.
