U.S. Tightens Rules on Chip Equipment Exports to China

• The Commerce Department revokes key authorizations, impacting Samsung, SK Hynix, and Intel, while reshaping global semiconductor supply dynamics.

Export Policy Shift Targets South Korean Firms

The U.S. government has moved to revoke export authorizations that previously allowed Samsung and SK Hynix to receive American semiconductor manufacturing equipment for use in China. These exemptions, granted in 2022, had enabled the companies to bypass broader restrictions on technology transfers to Chinese facilities. Under the new rules, both firms will now be required to apply for individual licenses to continue importing such equipment. Intel was also listed among affected companies, though it had already exited its Dalian operations earlier this year.

According to the Commerce Department, licenses may still be granted for maintaining existing production lines, but not for expanding capacity or upgrading technology. This distinction signals a more restrictive stance aimed at curbing technological advancement within Chinese chipmaking operations. Neither Samsung nor SK Hynix has issued a public response to the announcement. The decision is expected to influence strategic planning for foreign firms operating in China’s semiconductor sector.

Market Impact and Industry Reactions

The policy change is likely to affect U.S. equipment suppliers such as Lam Research, Applied Materials, and KLA Corp, whose sales to China may decline. Following the announcement, shares of Lam fell by 4%, Applied Materials dropped 2.8%, and KLA saw a 2.4% decrease. These companies have not yet commented on the potential impact of the licensing revocations. The move adds to existing uncertainty in the global chip supply chain, already strained by geopolitical tensions and trade restrictions.

In June, officials hinted that such measures were being considered as a precaution in case trade negotiations between the U.S. and China deteriorated. Currently, both countries are operating under a tariff truce, with 30% duties on Chinese imports to the U.S. and 10% on American goods entering China, set to remain in place until November. The broader trade conflict has disrupted sectors ranging from rare earths to agricultural exports. The White House has not issued a formal statement regarding the latest export control adjustments.

License Backlog and Strategic Implications

Thousands of export license applications from U.S. companies remain pending, contributing to a growing backlog that includes billions of dollars in semiconductor equipment. The revocations announced this week will take effect in 120 days, giving affected firms limited time to adjust their supply strategies. Samsung and SK Hynix previously benefited from Validated End User (VEU) status, which allowed faster and more reliable shipments from U.S. suppliers. That designation will now be removed, further complicating logistics and procurement.

The shift may create opportunities for domestic Chinese equipment manufacturers to fill gaps left by restricted imports. It could also benefit U.S.-based Micron Technology, a direct competitor to Samsung and SK Hynix in the memory chip market. Analysts suggest that the policy may accelerate regional diversification efforts among global chipmakers. As the semiconductor industry continues to navigate geopolitical pressures, companies are reevaluating their manufacturing footprints and supply chain dependencies.