**US Proposes Annual Export Approvals for Chipmaking Supplies to South Korean Firms**
The United States is introducing a plan for annual approvals of chipmaking supply exports to Samsung Electronics Co. and SK Hynix Inc. for their factories in China. This move is a compromise aimed at maintaining stability in the global electronics sector after the Trump administration revoked waivers that previously allowed these companies easier access to necessary shipments.
Last week, officials from the US Commerce Department presented a “site license” proposal to their South Korean counterparts, which would replace the indefinite authorizations that the chipmakers had obtained under the previous administration. These authorizations, known as validated end user (VEU) designations, are set to expire at the end of this year. The VEU system had allowed Samsung and SK Hynix to ship estimated quantities of supplies to their Chinese factories, contingent on upfront security and monitoring commitments, despite broader US restrictions on semiconductor shipments to China.
Under the new proposal, South Korea’s leading chip manufacturers will need to seek approval from Washington for a year’s worth of restricted equipment, parts, and materials, specifying exact quantities. While this adds complexity to the approval process, it also provides a pathway for these companies to continue operating their large factories in China, which produce components for various applications, including smartphones and data centers.
US officials have expressed their intention to avoid disrupting operations at these facilities, although they will not approve shipments of equipment that could be used for upgrades or expansions. The draft proposal has left South Korean industry and government officials feeling both relieved that a solution is available and frustrated by the additional requirements.
The situation has once again placed South Korea in a challenging position between its key ally, the US, and its largest trading partner, China. The revocation of VEU waivers occurred shortly after President Lee Jae Myung, who has advocated for balanced relations with both nations, met with former President Donald Trump to discuss a defense and investment agreement. Additionally, the Trump administration’s actions have impacted South Korea’s other major firms, such as LG Energy Solution Ltd. and Hyundai Motor Co., following immigration raids at their battery plant venture in Georgia.
In 2022, Washington implemented extensive controls on chip shipments to China as part of a long-term strategy to limit the country’s capabilities in semiconductors and artificial intelligence.
**FAQ**
**What are the implications of the US’s new export approval process for South Korean chipmakers?**
The new annual export approval process introduces additional complexity for South Korean chipmakers, requiring them to specify exact quantities of restricted supplies. While it allows them to continue operations in China, it also limits their ability to upgrade or expand their facilities.
