US Considers Targeting Samsung, Hynix, and TSMC Operations in China, Sources Reveal

Key Takeaways

The US may revoke authorizations for Samsung, SK Hynix, and TSMC to receive goods and technology for their China operations.
This potential move could hinder foreign chipmakers’ production capabilities in China amid ongoing trade tensions.
US chip equipment stocks experienced declines following the news, while competitors like Micron saw gains.

Potential Changes to US Chip Export Policies

The US Department of Commerce is contemplating revoking recent export authorizations that facilitate operations for global chipmakers—Samsung, SK Hynix, and TSMC—in China. This decision would complicate their ability to obtain US goods and technology crucial for semiconductor production. While the likelihood of such a withdrawal remains uncertain, it could severely impact foreign chipmakers in China, where semiconductors are vital across numerous industries.

A White House official stated that this consideration is primarily a precautionary measure, aimed at preparing for any potential breakdown in the existing trade agreements between the US and China. The official expressed optimism about the agreement’s success and anticipated that rare earth exports from China would proceed as planned. The official emphasized, “There is currently no intention of deploying this tactic,” describing the potential revocation as a tool reserved for future use should bilateral relations deteriorate.

Following the publication of this news by The Wall Street Journal, shares of US chip equipment manufacturers declined. Companies such as KLA, Lam Research, and Applied Materials saw their stock prices drop, while Micron, a key competitor in the memory chip sector, experienced a slight increase. Representatives from TSMC, Samsung, and Hynix, as well as several affected US suppliers, did not comment on the situation.

In response to prior restrictions implemented in October 2022, the US had granted “Validated End User” (VEU) status to these companies, easing their access to essential goods from US vendors without the hassle of obtaining multiple export licenses. This designation was designed to allow foreign manufacturers to receive US-controlled products “more easily, quickly, and reliably,” according to the Commerce Department.

Despite potential revocations, a Commerce Department spokesperson remarked that foreign chipmakers will still have the ability to operate in China. The spokesperson clarified that new enforcement mechanisms would align with existing licensing requirements applicable to other semiconductor companies exporting to China. However, industry insiders warn that making it difficult for US equipment manufacturers to export to foreign firms could inadvertently strengthen domestic Chinese competitors, potentially providing them with an unintended advantage in the market.

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