The U.S. is proposing annual licenses for Samsung and SK Hynix

The Trump administration is considering issuing annual licenses for South Korean companies, SK Hynix and Samsung. The new annual requirements came days after South Korea’s President Lee Jae Myung signed a defense and investment agreement with the U.S. 

In Washington’s latest attempt to restrict China’s semiconductor industry from its technology, the Trump administration has proposed a licensing system for Samsung and SK Hynix’s factories in China.

The U.S. is proposing annual licenses for Samsung and SK Hynix

The U.S. is proposing annual approvals for exports of chipmaking supplies to Samsung Electronics Co. and SK Hynix Inc.’s factories in China. The proposal is a compromise from the Trump administration, as they revoked Biden-era waivers that had allowed the South Korean companies to secure these shipments without any hitches.

Officials from the U.S. Commerce Department recently presented the proposal to South Korean officials, describing it as a “site license” system. This new system would replace the indefinite authorizations that were previously granted under the Validated End User (VEU) designations, which are due to expire at the end of this year.

The VEU system gave Samsung and SK Hynix long-term approval to ship estimated quantities of supplies to their Chinese factories, based on strict security and monitoring commitments.

Under the Trump administration’s new plan, however, the companies would need to apply each year for approval of restricted equipment, materials, and parts. Each request would have to specify exact quantities.

While this system introduces more red tape, it offers a way for South Korea’s top chipmakers to keep their Chinese facilities running without having to seek permits for every single shipment.

U.S. officials have emphasized that the goal is not to halt operations but to prevent shipments that could enable the factories to expand or upgrade in ways that may benefit China’s semiconductor ambitions.

The U.S. has imposed restrictions on semiconductor shipments to China since 2022, in an attempt to curb the country’s advances in chips and artificial intelligence.

So far, officials in South Korea have expressed mixed feelings about the proposal. While they are happy about the potential way forward, they have also voiced their dissatisfaction at the additional burden and uncertainty the system would create.

South Korean officials have raised concerns regarding the proposal

The revocation of the VEU waivers occurred just days after South Korean President Lee Jae Myung signed a defense and investment agreement with U.S. President Donald Trump, earning criticism from Beijing.

Samsung and SK Hynix are South Korea’s two largest chipmakers. Their Chinese factories play a central role in global supply chains, as they produce the components that power much of today’s electronics industry. According to analysts, these facilities account for a substantial share of global DRAM and NAND memory output.

Securing the original VEU designations was once considered a major diplomatic success for former South Korean President Yoon Suk Yeol, solving what officials in Seoul described as “the biggest trade issue” facing the companies at the time. Now, those achievements risk being rolled back.

The Trump administration argued that the waivers represented a loophole that undermined U.S. export controls. Officials have stressed they want more visibility into the flow of supplies at the Chinese plants and for shipments to occur only under proactive approval from Washington.

Countering that, industry representatives have stated that the VEU program already allowed the U.S. to exercise significant oversight, including the ability to block certain exports and demand details on shipments. They also worry that predicting exact needs a year in advance is unrealistic, especially since manufacturing equipment can break unexpectedly.

If the new site license system fails to process urgent requests quickly enough, factories could face costly disruptions. A U.S. official dismissed such concerns, saying Washington has a robust system to issue licenses when necessary.

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