The United States is proposing annual approvals for exports of chipmaking supplies to Samsung Electronics (005930.KS), and SK Hynix's (000660.KS), China-based factories, Bloomberg News reported on Monday.
Officials in the U.S. Commerce Department last week presented to Korean counterparts a "site license" idea to supplant indefinite authorizations the chipmakers secured under the previous administration, the report said, citing unidentified sources.
The VEU system granted Samsung and SK Hynix perpetual approval to ship estimated quantities of supplies, based on up-front security and monitoring commitments, to factories in China — where the US has broadly curbed shipments of semiconductors and the tools needed to make them. The Trump team’s proposal instead requires South Korea’s two largest companies to seek Washington’s approval for a year’s worth of restricted gear, parts and materials at a time, spelled out in exact quantities, the people said.
That introduces newfound complexity to the process, but also a way for South Korea’s top chipmakers to keep operating giant factories in China that churn out components used in everything from smartphones to data centers. US officials have said they don’t want to disrupt operations at those facilities, but also won’t approve shipments of gear that could be used to upgrade or expand them.
All told, Washington’s draft proposal left South Korean industry and government officials both relieved that a path forward exists and frustrated by the extra burden, said the people, who requested anonymity to disclose sensitive conversations.
Spokespeople for Samsung and South Korea’s Ministry of Trade, Industry and Energy declined to comment, while SK Hynix did not immediately respond. The US Commerce Department’s Bureau of Industry and Security, which oversees semiconductor export controls, also did not respond to a request for comment.
The overall situation has once again thrust South Korea between its most important ally and its biggest trading partner. The US revoked VEU waivers — jolting markets and drawing anger from China — mere days after President Lee Jae Myung, who campaigned on balancing ties with Washington and Beijing, shook hands with President Donald Trump on a defense and investment agreement.
And now the Trump administration has upended operations for South Korea’s third- and fifth-largest firms, LG Energy Solution Ltd. and Hyundai Motor Co., by sending immigration officers to raid their battery plant venture near Savannah, Georgia.
Washington imposed sweeping controls on chip shipments to China in 2022 as part of a long-running campaign to limit the Asian country’s prowess in semiconductors and artificial intelligence. Former President Joe Biden’s team issued waivers to Samsung and SK Hynix — as well as Taiwan Semiconductor Manufacturing Co. — to blunt the impact of those curbs on companies headquartered in friendly places that had long operated plants in an adversary nation.
Securing those VEU designations was a major diplomatic victory for former South Korean President Yoon Suk Yeol. That status solved “the biggest trade issue” for the two chipmakers, as once explained by an official in Seoul.
Bd-pratidin English/ ANI
