(JW Insights) Aug 30 -- The U.S. has decided to extend its one-year exemption allowing South Korean and Taiwanese chipmakers to continue bringing advanced semiconductor technology and related equipment into China, reported Nikkei on August 24, citing multiple industry sources.

The move is seen as potentially undermining U.S. efforts to curb China's ambitions in the tech sector. But it is also expected to prevent widespread disruption in the global semiconductor supply chain.

Alan Estevez, the U.S. undersecretary of commerce for industry and security, had touched on the possibility of an extension during an industry event in June. The duration of the extension has not yet been decided. But a proposal in the administration to make the exemptions indefinite has been floated, said the Nikkei Asia report.

The U.S. last October imposed sweeping restrictions on exports of advanced semiconductors and chip-making equipment to China. It also banned "U.S. persons" from helping the development or production of chips at Chinese facilities without a license.

Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Co., which all have major production hubs in China, lobbied against the curbs, claiming they would deal a major blow to business. The U.S. later issued the companies a one-year waiver that allowed them to continue transactions similar to those they had been engaged in before the introduction of the restrictions.

The U.S. plans to extend that exemption, currently set to expire this October, with the same conditions. This would permit South Korean and Taiwanese companies to bring American chipmaking equipment and other key supplies to their facilities in China, allowing production to continue uninterrupted.

Given the complexity of the global chip ecosystem, companies would struggle to extract their supply chains from China quickly.

Washington does not believe disrupting global supply chains will be in its best interest, especially with the U.S. presidential race coming up in 2024, a former senior U.S. official said.

Meanwhile, semiconductor companies are growing frustrated by the restrictions around China, according to the Nikkei report.

(Gao J)