https://www.bloomberg.com/news/arti...china-chip-supply-approvals-for-samsung-hynix
US Weighs Annual China Chip Supply Approvals for Samsung, Hynix
By Mackenzie Hawkins
September 8, 2025 at 2:05 PM GMT+8
The US is proposing annual approvals for exports of chipmaking supplies to Samsung Electronics Co. and SK Hynix Inc.’s factories in China, a compromise aimed at preventing disruptions to the global electronics industry.
The proposal, called a “site license,” would require the 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 plan introduces complexity to the process, but also provides a way for the companies to keep operating factories in China, with US officials seeking more visibility into supplies and wanting shipments to only happen when Washington proactively approves them.
The US is proposing annual approvals for exports of chipmaking supplies to Samsung Electronics Co. and SK Hynix Inc.’s factories in China, a compromise aimed at preventing disruptions to the global electronics industry after Trump officials revoked Biden-era waivers that let the companies more easily get such shipments.
Officials in the US Commerce Department last week presented to Korean counterparts a “site license” idea to supplant indefinite authorizations the chipmakers secured under the previous administration, according to people familiar with the matter. Those so-called validated end user, or VEU, designations are set to expire at the end of this year.
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.
Discussions remain ongoing and no final decision has been made. In some ways, Washington’s latest offer may be the best outcome Seoul could hope for.
Given that Trump officials have been adamant they won’t restore Samsung and SK Hynix’s VEU waivers, which they’ve criticized as a “Biden-era loophole,” annual site licenses would at least provide more predictability than if companies had to apply for new US approvals on a shipment-by-shipment basis. Washington officials said in a federal notice that revoking Samsung and SK Hynix’s VEU status would require them to process an additional 1,000 permits each year.
But companies also have a hard time predicting exactly which parts they may need to fix production gear that could break at any moment over the course of 12 months. And if they urgently need to import components they didn’t spell out in the initial site license, there’s fear that BIS may not process approvals quickly enough to avoid manufacturing disruptions.
A US official, asked about industry concerns regarding permit timelines, dismissed those fears. Washington has a robust system to quickly issue licenses if the need arises, balancing commercial realities with American national security interests, said the official, who was speaking in general terms about the VEU issue and not specifically about the site license idea.
Overall, Trump’s team wants more visibility into supplies at the South Korean chipmakers’ plants, according to people familiar with their thinking — and for shipments to only happen when Washington proactively approves them.
Industry officials, meanwhile, have pointed out in ongoing discussions with the US government that the VEU program already gives Washington significant say over what happens at their China facilities — including the ability to demand information about specific planned or completed shipments, and to block exports the US deems risky.
Washington is worried about “technology leakage or equipment being diverted to Chinese firms,” said one South Korean trade official, who asked not to be named discussing a sensitive diplomatic matter. But given that Samsung and SK Hynix already made substantial security assurances as part of their VEU designations, the official said, “the real question is how to reassure them on that point.”
— With assistance from Yoolim Lee, Heesu Lee, and Debby Wu
https://www.bloomberg.com/news/arti...china-chip-supply-approvals-for-samsung-hynix
US Weighs Annual China Chip Supply Approvals for Samsung, Hynix
By Mackenzie Hawkins
September 8, 2025 at 2:05 PM GMT+8
The US is proposing annual approvals for exports of chipmaking supplies to Samsung Electronics Co. and SK Hynix Inc.’s factories in China, a compromise aimed at preventing disruptions to the global electronics industry.
The proposal, called a “site license,” would require the 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 plan introduces complexity to the process, but also provides a way for the companies to keep operating factories in China, with US officials seeking more visibility into supplies and wanting shipments to only happen when Washington proactively approves them.
The US is proposing annual approvals for exports of chipmaking supplies to Samsung Electronics Co. and SK Hynix Inc.’s factories in China, a compromise aimed at preventing disruptions to the global electronics industry after Trump officials revoked Biden-era waivers that let the companies more easily get such shipments.
Officials in the US Commerce Department last week presented to Korean counterparts a “site license” idea to supplant indefinite authorizations the chipmakers secured under the previous administration, according to people familiar with the matter. Those so-called validated end user, or VEU, designations are set to expire at the end of this year.
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.
Discussions remain ongoing and no final decision has been made. In some ways, Washington’s latest offer may be the best outcome Seoul could hope for.
Given that Trump officials have been adamant they won’t restore Samsung and SK Hynix’s VEU waivers, which they’ve criticized as a “Biden-era loophole,” annual site licenses would at least provide more predictability than if companies had to apply for new US approvals on a shipment-by-shipment basis. Washington officials said in a federal notice that revoking Samsung and SK Hynix’s VEU status would require them to process an additional 1,000 permits each year.
But companies also have a hard time predicting exactly which parts they may need to fix production gear that could break at any moment over the course of 12 months. And if they urgently need to import components they didn’t spell out in the initial site license, there’s fear that BIS may not process approvals quickly enough to avoid manufacturing disruptions.
A US official, asked about industry concerns regarding permit timelines, dismissed those fears. Washington has a robust system to quickly issue licenses if the need arises, balancing commercial realities with American national security interests, said the official, who was speaking in general terms about the VEU issue and not specifically about the site license idea.
Overall, Trump’s team wants more visibility into supplies at the South Korean chipmakers’ plants, according to people familiar with their thinking — and for shipments to only happen when Washington proactively approves them.
Industry officials, meanwhile, have pointed out in ongoing discussions with the US government that the VEU program already gives Washington significant say over what happens at their China facilities — including the ability to demand information about specific planned or completed shipments, and to block exports the US deems risky.
Washington is worried about “technology leakage or equipment being diverted to Chinese firms,” said one South Korean trade official, who asked not to be named discussing a sensitive diplomatic matter. But given that Samsung and SK Hynix already made substantial security assurances as part of their VEU designations, the official said, “the real question is how to reassure them on that point.”
— With assistance from Yoolim Lee, Heesu Lee, and Debby Wu
https://www.bloomberg.com/news/arti...china-chip-supply-approvals-for-samsung-hynix