U.S. Eases Equipment Import Restrictions for Samsung and SK Hynix's China Factories

According to foreign media reports, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has shifted its policy: instead of revoking the "Validated End-User (VEU)" status of South Korean semiconductor companies’ China-based factories, it will allow exports through an annual equipment export quota approval system. This means Samsung Electronics and SK Hynix no longer need to wait for U.S. approval for each individual equipment import to their Chinese semiconductor facilities.
The report states that enterprises can pre-apply for the types and quantities of required semiconductor equipment and components annually, and the U.S. government will review and decide whether to approve the exports. Compared with being re-included in the VEU list (a comprehensive export license), this process is stricter, but it is regarded as an easing measure compared to seeking individual approval for each equipment import.
VEU refers to a special status that allows the supply of U.S.-made equipment without additional licensing procedures or time constraints, provided certain security safeguards are met. Previously, Samsung Electronics’ NAND factory in Xi’an, China, and SK Hynix’s DRAM factory in Wuxi and NAND factory in Dalian, China, all obtained VEU status from the U.S. government, enabling them to import U.S.-made equipment without restrictions.
However, at the end of August last year, BIS announced that it would remove the three Chinese legal entities operating these factories from the VEU list. The measure was originally scheduled to take effect 120 days after its publication in the Federal Register (September 2nd), i.e., on the 31st of this month. If implemented as planned, these companies’ Chinese factories would have had to obtain individual U.S. government approval for each U.S.-made equipment import starting from the 31st. Beyond the approval itself, concerns were raised that the time consumed by administrative procedures could pose significant obstacles to factory operations.
Some opinions point out that even with the implementation of this new measure, operational uncertainties remain. Semiconductor enterprises cannot actually accurately predict the equipment and components they will need each year. Additionally, even if the U.S. government approves equipment exports annually, it will maintain its policy of prohibiting the export of equipment for expanding production capacity or upgrading Chinese factories.