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

Seoul [South Korea], 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.

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