U.S. TO CAP KOREAN CHIPS MADE IN CHINA

[Anchor Lead]

The U.S. government said an upper limit would be set on the manufacturing of chips by South Korean companies that are being produced in China. The measure comes ahead of receiving applications for government subsidies for semiconductor production and research within the U.S. This is seen as a move to restrict high-end chips from being produced in China.

[Pkg]

A U.S. government official said an upper limit would be set on the manufacturing of chips by Samsung Electronics and SK Hynix at their Chinese factories. This is how the U.S. Commerce Department Undersecretary Alan Estevez answered the question of what happens after the one-year suspension of exports control ends.

[Soundbite] Alan Estevez (U.S. Commerce Dept. Undersecretary)

Back in October, the U.S. Commerce Department banned exports of U.S.-made equipment to companies producing chips in China. But Samsung Electronics and SK Hynix were given a one-year grace period. However, the U.S. Secretary of Commerce Gina Raimondo has made it clear that stronger export restrictions will be enforced on high-end chips used to boost China's military strength.

[Soundbite] Gina Raimondo (U.S. Secretary of Commerce)

The U.S. government is to receive applications for 39-billion-dollar government subsidies for U.S. semiconductor production and research from Feb. 28. Samsung Electronics plans to build a new chip factory in the U.S., while SK is looking to set up an R&D center there. The U.S. says only companies that do not make new investments in China are eligible for the subsidies. The Korean government has reportedly requested that the Korean chipmakers be allowed to operate their manufacturing facilities in China as before while still being eligible for the U.S. subsidies.