The government has assessed that the guardrails of the U.S. CHIPS and Science Act limiting investment in China by fund recipients do permit domestic firms to expand their operations to some degree.

The Ministry of Trade, Industry and Energy on Wednesday released its assessment of the protections aimed at preventing CHIPS Act funding from undermining U.S. national security through semiconductor production investments in "countries of concern."

The ministry determined that the draft version of the guardrails appear to permit local firms such as Samsung Electronics and SK Hynix to perform maintenance on their production facilities in China and engage in partial expansion and technological development.

The regulations announced by the U.S. Department of Commerce impose a five-percent limit on the expansion of semiconductor manufacturing capacity in countries of concern for ten years for recipients of funds under the Act, affecting facilities in China and Russia among others.

The South Korean ministry said it plans to continue consulting with the U.S. on the matter during the 60-day period before the finalization of the guardrails, with a visit to Seoul by U.S. officials handling the Act set for Thursday.