Washington: The U.S. Commerce Department announced a significant policy shift on Friday, declaring that South Korean technology giants Samsung Electronics Co. and SK hynix Inc. will no longer retain their "validated end-user (VEU)" status. This change mandates that the companies secure specific licenses to export certain U.S. chipmaking equipment to their manufacturing facilities in China.According to Yonhap News Agency, the Bureau of Industry and Security, part of the Commerce Department, detailed its plans on the Federal Register, noting the revision of the existing VEU authorizations list for China. The removal of Samsung, SK hynix, and Intel Semiconductor Ltd. from this list highlights the U.S.'s intent not to approve licenses for capacity expansion or technological upgrades at Chinese plants.Previously, during the Biden administration, Samsung and SK hynix enjoyed VEU status, allowing them to ship U.S. semiconductor equipment to pre-approved sites under a general authorization, mitigating the need fo r individual export licenses. The new policy will take effect 120 days post its official publication on September 2.In an official statement, the Commerce Department emphasized that revoking the VEU status is aimed at closing a specific "Biden-era loophole." Under Secretary of Commerce for Industry and Security Jeffrey Kessler remarked on the Trump Administration's dedication to sealing export control gaps that disadvantage U.S. companies, calling the decision a crucial measure towards achieving this goal.This development comes amid escalating tensions between the U.S. and China over technological supremacy, maritime security, and other areas, prompting tighter U.S. regulations on the export of advanced technologies to China.Reacting to the announcement, the South Korean government expressed its commitment to mitigating any potential disruptions for domestic chipmakers. The Ministry of Trade, Industry and Energy acknowledged prior notification from the U.S. regarding the termination of the VEU status fo r Samsung and SK hynix.The ministry's statement highlighted ongoing dialogues with the U.S. Department of Commerce to address potential modifications to the VEU system, emphasizing the critical role of Korean chipmakers' Chinese operations in maintaining global semiconductor supply chain stability. "Even if VEU status is withdrawn, we will continue to work with the U.S. to ensure any impact on Korean companies is minimized," the ministry affirmed.
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