The U.S. has announced export controls on HBM and semiconductor equipment, including products from third countries including our country, putting our country's semiconductor industry on high alert.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced on the 2nd a revised export control measure for high bandwidth memory (HBM) and advanced semiconductor equipment and published it in the Official Gazette.

According to the US announcement, all HBM currently in production are subject to controls, and exporting these products to the 24 countries designated by the US as arms embargo countries (including China) requires a license from the US Department of Commerce. HBM controls will take effect on January 1, 2025.

HBM after co-packaging is not controlled, and HBM2 can apply for an exemption from approval if certain conditions are met.

In addition, the United States has added 24 new types of semiconductor equipment, including heat treatment and measuring equipment, and 3 types of software related to these, as newly added items subject to export controls in addition to the 29 types of advanced semiconductor equipment currently under control, in order to expand its existing control of advanced semiconductor equipment.

Here, the United States added 140 companies and institutions, including advanced semiconductor manufacturing facilities (fabs) and semiconductor equipment manufacturers located in China, to the list of concerned traders for national security reasons.

Countries exempt from the Foreign Direct Product Rule (FDPR) are designated only for semiconductor equipment.

Thirty-three countries, including Japan and the Netherlands, that already have export controls on semiconductor equipment at the same level as the United States or have little to do with semiconductor equipment, have been designated as FDPR-exempt countries, and even among exempted countries, the actual control effects are similar.

Our country has not yet implemented export controls on semiconductor equipment at the level of the United States, so it is not included in the list of exempted countries.

The current US export control measures on HBM and semiconductor equipment are subject to the Foreign Direct Product Rule (FDPR).

Accordingly, even HBM and semiconductor equipment produced in third countries outside the United States will be considered US products and subject to control if they meet certain requirements. In this case, a license from the U.S. Department of Commerce is required to export the product to a country of security concern or a trader of concern to the United States.

This measure and the application of FDPR may have some impact on our companies producing HBM, but it is expected that the impact can be minimized by switching to export methods permitted by U.S. regulations in the future.

In the case of semiconductor equipment, the control target is set to be advanced semiconductor equipment that is important from the perspective of U.S. national security, and it is understood that there are only a small number of domestic companies involved in this, so the impact is not expected to be significant.

The U.S. Department of Commerce plans to apply the principle of “presumption of denial” when applying for export permits for items controlled by this measure, but exports will be possible regardless of this measure for our companies in China that have already obtained VEU (Validated End-User) approval.

This measure is being implemented independently by the United States from a national security perspective, but the two countries have been closely consulting on it in consideration of its impact on the ROK-US alliance and our companies. The government has continued to communicate with our industry and collect opinions to minimize the impact on our industry, and both the Korean and U.S. governments have agreed to closely monitor the impact of this measure and work to ensure that companies in both countries do not suffer unexpected damage.

The government plans to closely analyze this U.S. measure, continuously monitor its impact, and focus its efforts on finding support measures to minimize export difficulties for companies.

First, we plan to share the details of this US measure by holding a meeting with the semiconductor equipment industry on December 4th, and also open and operate an ‘Export Control Consultation Center’ at the Korea Semiconductor Industry Association (KSIA) and the Korea Trade Security Institute (KOSTI).

We plan to actively support the industry by holding export control system briefing sessions for Chinese export companies and distributing guidelines in the future, and we plan to intensively discuss the difficulties faced by our companies with the U.S. government as soon as possible.