The Donald Trump administration in the United States is reportedly considering allowing Samsung Electronics and SK Hynix to export American-made semiconductor manufacturing equipment to their factories in China.
On September 7 (local time), Bloomberg News, citing sources, reported that the U.S. Department of Commerce last week proposed to the South Korean government a plan to permit exports by approving the volume of equipment shipments to South Korean semiconductor factories in China on an annual basis.
Until now, South Korean semiconductor factories located in China have not faced issues importing American equipment, as they were included on the Bureau of Industry and Security (BIS) "Validated End-User (VEU)" list. The VEU designation grants exceptional status, allowing the supply of American equipment without separate approval procedures or time restrictions, provided certain security conditions are met. However, the Trump administration recently removed the Chinese factories of Samsung and SK Hynix from the VEU list. As a result, concerns have been growing that the stable operation of Samsung Electronics and SK Hynix's factories in China could become difficult in the future.
In this context, the Trump administration is proposing to replace the unrestricted VEU system with a new system that would require separate annual approvals. If this new system is implemented, Samsung Electronics and SK Hynix would be able to continue operating their factories in China, but there are concerns that the administrative burden could increase significantly, as they would need to obtain approval every year. From the companies' perspective, it is difficult to accurately predict which replacement parts will be needed to repair production equipment that may break down over the next 12 months.
Additionally, it has been reported that even if the U.S. government allows annual equipment exports, it plans to prohibit the export of equipment that could be used to expand or upgrade the factories in China.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
