The United States is considering limiting the chip production abilities of South Korean companies within China in order to inhibit Chinese access to advanced technology.

Undersecretary of Commerce for Industry and Security Alan Estevez commented on South Korean relations during a Thursday appearance at the Center for Strategic & International Studies. He said that the United States would take action to limit the ability of companies such as Samsung or SK Hynix to continue expanding within China. These new limits follow international allies agreeing to similar chip export limits and the United States increasing its efforts to build chip factories domestically.

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"We're working with those companies on the way forward there," Estevez said. "What it'll likely be is a cap on the levels they can grow to in China."

South Korean companies received a one-year reprieve last year from export controls that placed a limit on how many chips and products a company can produce with U.S. equipment for the Chinese market before being penalized. The country could also be asked to join Japan and the Netherlands in adopting more explicit restrictions on chip exports. Such a restriction could have a detrimental effect on South Korea's economy due to the size of South Korean companies' market share in China.

Estevez also noted that the U.S. and South Korea formed a working group on export controls in November but did not state what level of collaboration they had or what resolves may have come of it.

Commerce Secretary Gina Raimondo announced on Thursday that the United States would construct at least two new semiconductor factory hubs with the money provided by the CHIPS Act, a bill passed in July to subsidize domestic production.

Chip companies are also fighting with one another to get their hands on CHIPS funding, including attacks on one another and their legitimacy.