SEOUL, December 30 (AJP) - The United States has decided to partially ease planned restrictions on shipments of semiconductor manufacturing equipment to Samsung Electronics and SK hynix plants in China, helping the South Korean chipmakers avoid immediate and significant operational disruptions, industry officials said on Tuesday.
Washington had been preparing to revoke the companies’ broad export authorization status and require case-by-case approvals for each shipment of U.S.-made equipment.
Instead, it has shifted to a system under which equipment exports will be approved on an annual basis, the officials said.
Under the revised approach, the Commerce Department’s Bureau of Industry and Security (BIS) will cancel the Verified End User (VEU) status previously granted to the companies’ China-based plants but will allow exports through once-a-year approvals covering specified volumes of equipment.
VEU status allows recipients to import U.S.-origin equipment without individual licences if they meet certain security requirements.
Samsung’s NAND flash memory plant in Xian and SK hynix’s DRAM plant in Wuxi and NAND flash facility in Dalian had been designated as VEUs, enabling relatively unrestricted imports of U.S. equipment. In late August, however, BIS said it would remove three China-based subsidiaries operating those plants from the VEU list.
That decision was due to take effect on Dec. 31 following a 120-day grace period after publication in the Federal Register on Sept. 2. Under the original plan, the plants would have been required to seek separate U.S. approval for each shipment of U.S.-made equipment from year-end, raising concerns about delays and potential disruptions to production.
As the grace period neared its end, the U.S. government opted to soften its stance by introducing an annual approval system.
Under the framework, companies will submit advance applications detailing the types and quantities of equipment and parts they plan to import, with U.S. authorities reviewing and deciding whether to grant approval.
Industry officials said the process is more burdensome than maintaining VEU status but significantly less risky than applying for licences on a shipment-by-shipment basis. U.S. authorities had estimated that without VEU status, Samsung and SK hynix could be required to file roughly 1,000 licence applications a year.
Still, officials cautioned that uncertainty remains, as it can be difficult to accurately forecast annual equipment demand, and the outcome of the approval process could still affect operations at the China-based plants.
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