US mulls annual China chip supply permits for Samsung, Hynix

The US is proposing annual approvals for exports of chipmaking supplies to Samsung Electronics and SK Hynix 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 authorisations 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 upfront 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 new-found 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 centres. US officials have said they do not want to disrupt operations at those facilities, but also will not 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.