American Idea for Factories in China: Proposed Annual Approval
According to Bloomberg on September 8, the U.S. government is taking a step back and proposing to implement annual approvals for the export of chip manufacturing equipment from Samsung Electronics and SK Hynix's factories in China.
Although the U.S. and South Korea just signed a trade agreement, South Korean companies have been continuously hit by the U.S. government recently. Recently, the U.S. government revoked the exemptions for Samsung and SK Hynix's factories in China. Last week, the U.S. government arrested 475 workers at a Hyundai Motor factory in Georgia, accusing them of being "illegal immigrants," of whom about 300 were South Korean citizens.
According to sources, last week, U.S. Commerce Department officials proposed the idea of "on-site licenses" to replace the indefinite authorization that chip manufacturers received during the Biden administration. It is said that the Trump team proposed that Samsung Electronics and SK Hynix receive one-year export exemptions, including restricted equipment, parts, and materials, and specify the exact quantities.
Previously, Samsung and SK Hynix enjoyed full and fast export privileges due to their "Verified End-User" (VEU) status. However, after the U.S. government revoked the exemption, this privilege will take effect after 120 days.
According to the sources, the related discussions are still ongoing, and no final decision has been made yet.
Bloomberg believes that this introduces more regulatory steps but ensures the continuity of operations, aiming to prevent the global electronics industry from being disrupted. U.S. officials stated that they do not want to disrupt the operations of South Korean companies' factories in China, but they will not approve the export of equipment used for upgrading or expanding these factories.
According to these sources, the latest proposal from the U.S. has triggered complex reactions in South Korea: on one hand, the South Korean industrial sector and government officials feel relieved; but at the same time, they are frustrated by the additional burdens from the Trump administration.
The White House and the U.S. Department of Commerce have not responded to requests for comments. Reuters reprinted the report, but also stated that it could not verify the content.
Bloomberg reported that the spokesperson for Samsung and the Ministry of Trade, Industry and Energy of South Korea refused to comment. SK Hynix responded by saying that they would "maintain close communication with the South Korean and U.S. governments and take necessary measures to minimize the impact."
It was reported that U.S. government officials have long regarded the VEU system as a "loophole in the Biden administration," concerned about "technology leakage or equipment being transferred to Chinese companies." A source said that overall, the Trump team wants to know more about the supply situation of South Korean chip manufacturers' factories, and only shipments can be approved if Washington takes the initiative.
However, former U.S. officials refuted that Samsung and SK Hynix have already made substantial security assurances in their VEU designations.
At the same time, the U.S. proposal for an annual review mechanism has institutional problems. A U.S. official stated in a federal notice that revoking the exemptions for Samsung and SK Hynix would require them to process an additional 1,000 licenses each year. In addition, South Korean companies said that they find it difficult to accurately predict which parts they might need to repair production equipment that could break down at any time within 12 months.
Original: www.toutiao.com/article/1842752124359680/
Statement: This article represents the views of the author.