In January, the U.S. government introduced stringent regulations targeting the semiconductor industry, focusing on additional verification measures for advanced semiconductors and integrated circuits. These regulations mandate inspections to ensure that advanced semiconductor chips manufactured by major foundries are not supplied to sanctioned companies in countries like China. This move is part of a broader strategy to maintain U.S. technological leadership and protect national security amidst ongoing trade tensions and technological competition with China.

On March 13, Samsung Electronics submitted an opinion letter to the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, expressing concerns that these regulations could “lead to unintended consequences and impede innovation.” The letter addressed the Interim Final Rule (IFR) and requested regulatory relaxation, emphasizing the need for “clear definitions of terms and scope.” Samsung also submitted confidential documents detailing potential business impacts.

The regulation requires foundry companies to identify customers when manufacturing chips subject to regulation and report this information quarterly to the U.S. authorities. Samsung’s opinion letter highlighted concerns about this requirement, arguing that it may hinder innovation while aiming to protect U.S. national security. The company stressed the importance of clear interpretations in several key areas, including outsourced semiconductor packaging and testing services (OSAT), processing by approved chip designers, and defining transistor count.

Samsung’s concerns are echoed by other industry players. U.S. equipment companies such as Applied Materials (AMAT) and KLA have also conveyed their opinions on the regulation, alongside related organizations like the Semiconductor Industry Association (SIA), which submitted letters requesting regulatory relaxation. The SIA emphasized its apprehension regarding the potential negative impacts of these regulations on global supply chains and technological progress.

The BIS plays a crucial role in implementing export control policies designed to prevent technology from reaching sanctioned entities. However, there is growing concern within the semiconductor industry about the potential negative impact of these regulations on innovation.

The U.S. Department of Commerce is expected to announce the final rule soon after completing the opinion collection process. As stakeholders await this announcement, there is hope that any new regulations will balance national security concerns with the industry’s need for growth and innovation.