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Key Points

The US Commerce Department has proposed a new annual approval system for semiconductor equipment shipments to Chinese factories operated by Samsung and SK Hynix. This "site license" system would replace the previous indefinite Validated End-User program that the Trump administration revoked. While stricter than the previous arrangement, it avoids the worst-case scenario of requiring approval for every individual equipment shipment. The new system is seen as a practical compromise that allows Korean chipmakers to continue operating their Chinese facilities with more predictability.

Key Points: US Proposes Annual Approvals for Samsung SK Hynix China Chip Equipment

  • US proposes stricter annual approval system for chip equipment to China
  • Replaces previous indefinite Validated End-User (VEU) program status
  • Avoids worst-case scenario of per-shipment approvals
  • Companies must submit detailed annual lists for government review
  • Seen as a practical compromise offering more predictability
  • Trump administration had revoked VEU calling it a loophole
2 min read

US proposes new annual approval system for Samsung, SK Hynix semiconductor equipment shipments to China

The US Commerce Department suggests replacing indefinite VEU status with yearly "site license" approvals for Samsung and SK Hynix semiconductor equipment shipments to their Chinese fabs.

"While the site license is procedurally more complex than VEU, it is seen as a second-best option that allows Korean semiconductor companies to continue running their Chinese plants. - Pulse Report"

Seoul, September 9

Instead of the previously more flexible regulations, the U.S. Department of Commerce is considering a new system of granting annual approvals for semiconductor equipment shipments to Chinese factories operated by Samsung Electronics Co. and SK Hynix Inc., as per a report by Pulse, the English service of Maeil Business Newspaper Korea.

Although still under review, the permanent comprehensive status applied until now will no longer be available. However, the worst-case scenario, requiring case-by-case approval for every single piece of equipment brought into the Chinese plants, appears to have been avoided.

Citing Bloomberg, the report stated that on Monday, during discussions with South Korea last week, the U.S. Commerce Department proposed a "site license" system.

Under this arrangement, companies such as Samsung and SK Hynix, which operate semiconductor fabs in China, would submit detailed annual lists of the equipment, components, and materials they need, and obtain U.S. government approval on a yearly basis.

The "site license" system is stricter than the Validated End-User (VEU) program, which granted indefinite comprehensive approval for importing equipment into China.

The Trump administration revoked VEU status for Samsung and SK Hynix after about three years. "While the site license is procedurally more complex than VEU, it is seen as a second-best option that allows Korean semiconductor companies to continue running their Chinese plants," the report noted.

The Trump administration has consistently argued that the VEU system, introduced under the previous Biden administration, was a regulatory loophole and has maintained its stance against reinstating it.

As a result, the industry had feared a worst-case scenario of requiring approval for every shipment of equipment.

According to U.S. federal estimates, the two companies could have been forced to seek as many as 1,000 approvals annually. If site licenses are introduced, Korean chipmakers would be spared from having to obtain approval every time they import equipment.

The report, citing Bloomberg, stated that the plan could be viewed as a practical compromise, offering more predictability than case-by-case permits.

- ANI

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Reader Comments

P
Priya S
The US is playing big brother again. While I understand security concerns, annual approvals create unnecessary uncertainty for businesses. Hope Indian companies learn from this and diversify their supply chains.
A
Aman W
Good move by US. China's tech ambitions need to be checked. National security should come first. India should also be careful about which countries we allow to invest in critical infrastructure.
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Sarah B
As someone working in tech, this annual approval system is better than case-by-case but still problematic. It creates planning headaches for companies. The semiconductor industry needs stability, not constant regulatory changes.
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Vikram M
This geopolitical tech war is affecting global supply chains. Indian consumers might see price fluctuations in electronics if this continues. Hope our government is preparing contingency plans.
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Nikhil C
While I support checks on technology transfer, the US approach seems heavy-handed. There should be more international cooperation rather than unilateral decisions that affect global markets.

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