To corner China America suspended the leave of two giants including samsung

To restrict China’s advancements, America has severed supplies to two major corporations, including Samsung, and has retracted special discounts. The United States has initiated a new strategy to hinder China’s technological progress. Specifically, the US has rescinded a special exemption previously granted to Samsung and Taiwan Semiconductor Manufacturing Company (TSMC). Consequently, these firms will encounter challenges in chip production within China. The US has taken further steps to maintain its technological edge over China. In particular, the US has revoked a special exemption for TSMC.

It is important to note that this exemption allowed TSMC to transfer American technology to its facility in Nanjing, China. This exemption is set to expire on December 31 of this year, after which TSMC will be required to secure a license from the US government to export American products to its plant. Notably, TSMC is recognized as the largest chip manufacturing company globally. Let us delve into this matter further.

Will this have repercussions for other companies?

In addition to TSMC, this exemption has also been rescinded for two prominent South Korean firms, SK Hynix and Samsung. It is noteworthy that both companies operate memory chip manufacturing plants in China. In this context, the US government has clarified its intention to discontinue policies that adversely affect American companies. According to a report by CNBC, experts suggest that this action is aimed at ensuring that China remains technologically behind.

What will be the consequences for TSMC?

This decision is not expected to significantly impact TSMC. In fact, TSMC operates two chip manufacturing facilities in China, one located in Shanghai and the other in Nanjing. The Nanjing facility is the most advanced, and US policies will predominantly affect operations there. However, it is important to highlight that the Chinese plant contributes only 3% to TSMC’s overall revenue, meaning the company is unlikely to experience substantial effects from this decision. In response, TSMC has informed CNBC that it is in discussions with the government.

What are the next steps?

Interestingly, America has recently permitted China to export certain chips while maintaining strict regulations regarding chip manufacturing. Experts clarify that this dual approach is part of a broader strategy.