US Revokes Chip Equipment Authorisations for Samsung, SK Hynix in China

The United States is making it more difficult for chipmakers Samsung and SK Hynix to produce chips in China. The US Commerce Department has revoked authorisations that allowed the companies to receive American semiconductor manufacturing equipment there. Intel also lost its authorisation for China, though it finalised the sale of its Dalian unit this year.

Credit: SK Hynix

These revocations mean the companies will now need to obtain licences to buy the equipment for China. The Commerce Department had previously granted exemptions to sweeping restrictions on the sale of US semiconductor equipment to China, first implemented in 2022.

The revocations will take effect in 120 days. The Commerce Department stated it plans to grant license applications for the companies to operate their existing facilities in China. However, it does not intend to grant licences to expand capacity or upgrade technology.

Credit: SK Hynix

SK Hynix said it would "maintain close communication with both Korean and the U.S. governments and take necessary measures to minimise the impact on our business." South Korea's industry ministry explained to the Commerce Department "the importance of a stable operation of our semiconductor companies in China for the stability of the global semiconductor supply chain." Seoul will continue discussions with Washington to minimise the impact on South Korean companies, the ministry added.

A spokesperson for China's commerce ministry said Beijing "opposes the U.S. move" and "will take necessary measures to resolutely safeguard the legitimate rights and interests of enterprises." The licensing change will likely reduce sales to China by US equipment makers KLA Corp, Lam Research, and Applied Materials.

Shares of Lam fell 4.4%, Applied Materials dropped 2.9%, and KLA shares were down 2.8%. In June, when the Commerce Department first raised the possibility of revoking the authorisations, a White House official stated the United States was "just laying the groundwork."

This was in case a truce in trade talks between the two countries fell apart. The US and China are operating under a tariff truce, with levies of 30% on Chinese imports to the US and 10% Chinese duties on US goods locked in until November.

Chris Miller, author of "Chip War," stated this move will make it harder for Korean chipmakers with facilities in China to continue producing more advanced chips. The move may help domestic Chinese equipment makers, whose tools can fill gaps. It also may help Micron, a major US competitor to South Korea's Samsung and SK Hynix in the memory chip sector.

Miller warned that if this is not accompanied by further steps against Chinese chipmakers like YMTC and CXMT, it risks opening market space for Chinese firms at the expense of the Korean firms. Foreign chipmakers like Samsung and SK Hynix previously held Validated End User status.

This status allowed US suppliers to ship goods to them "more easily, quickly and reliably," according to the Commerce Department. This meant export licences were not required, but this VEU status will now be removed.

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• The US Commerce Department revoked authorisations for Samsung, SK Hynix, and Intel to receive US chipmaking equipment in China.

• The revocations, effective in 120 days, require companies to obtain licences for equipment purchases.

• The US intends to permit operation of existing facilities but not expansion or technology upgrades.

Source: REUTERS