South Korean chipmakers would be able to continue operating and upgrading their chip manufacturing plants in China, as the US is reportedly considering to extend the exemption on export controls against China.

US Undersecretary of Commerce for Industry and Security Alan Estevez told an audience at an industry gathering last week that the government aims to extend exemptions for South Korean and Taiwanese chip suppliers with their facilities in China, according to a report by the Wall Street Journal on Monday.

Last October, the US government announced a sweeping set of regulations to ban export of certain semiconductor chips made using US technology, to China.

The rules had immediately prompted concerns for global chip suppliers operating in China, including the world's top two memory chipmakers Samsung Electronics and SK hynix, as it would prevent the firms from selling advanced chips to China and from supplying the equipment to produce advanced chips in China.

The US then offered a one-year waiver, which allows Korean chipmakers to import tools without having to apply for a licence, that is valid until October this year.

Industry watchers here believe the US government is likely to ease regulations for chipmakers operating in China, as the export curbs have not been as effective as Washington had hoped for.

"Some are raising questions over the US trade curbs that go against the market economy. The move by the US government appears to be met with skepticism, and it is not easy to transform the whole chip supply in the short term," an industry official said on condition of anonymity.

The Journal also reported that the US government is considering the waiver extension, as it may have underestimated the complexity and effects of isolating China from the production of advanced technology.

Samsung, the world's No. 1 memory chipmaker, counts on China for a quarter of its chip sales, while SK hynix generates nearly 40 percent of chip revenue in China. They also produce around half of their memory chips in their Chinese manufacturing facilities.

In a press conference last month, Seoul’s Industry Minister Lee Chang-yang had also said the Korean government expects the US exemption on its ban would likely be extended for a “significant” period of time, after the grace period ends in October.

“The US is in the process of writing the draft of the measure, and we are consulting with the US government to reduce potential damages and limitations for Korean companies in their technological advancement in China," Lee said.

But there are still calls for the US to take action to prevent Korean chipmakers from "backfilling" orders of Micron Technology in China, as the US-based memory chipmaker has been banned from selling certain products after failing Beijing's network security probe.

With Micron's China suspension, Fitch Ratings analyzed in a report that Korean chipmakers could likely benefit from higher chip prices within China.

"The impact is likely to be small and could be offset if Micron redirects the sale of its memory chips outside of China, as this would probably lower global chip prices," Fitch added.

Around 10 percent of Micron’s revenue come from China, according to Micron’s fiscal 2022 report.