[Source/Observer Network Wang Yi] The Wall Street Journal recently reported that the Trump administration is preparing to revoke the exemption for global semiconductor giants using American technology in China. Although this matter has not been finalized, the fact that the U.S. has expressed an intention to do so has already alarmed South Korea.

Reuters reported on June 22 that South Korean Trade Representative and Minister of Trade, Industry and Energy Ryu Han-koo, who plans to visit the U.S. this week for the third round of tariff negotiations between the U.S. and South Korea, stated that he would express concerns about the possibility of the U.S. canceling exemptions for foreign semiconductor manufacturers operating in China. "I will convey the industry's concerns and do my utmost," Ryu Han-koo responded when asked before his departure whether he was worried that this move might affect South Korean semiconductor manufacturers' operations in China.

Ryu emphasized that he will adopt a "national interest-based and pragmatic" approach in trade talks with the U.S., calling on lawmakers to create a "stable" and "predictable" environment for Korean companies investing in the U.S. However, he hinted that the tariff negotiations between South Korea and the U.S. may extend beyond July 8th.

South Korean Trade Representative and Minister of Trade, Industry and Energy Ryu Han-koo, Yonhap News Agency

Currently, South Korea faces a "minimum base tariff" of 10% from the U.S., as well as tariffs of 50% and 25% on steel and automobiles, respectively. Regarding the 25% "reciprocal tariff" suspended for 90 days, the U.S. and South Korea agreed during the first round of trade negotiations in late April to develop a comprehensive plan covering tariffs, non-tariff measures, economic cooperation, and other trade matters by July 8th.

It is expected that semiconductor and other technical issues will be major topics of discussion in the trade negotiations. The JoongAng Ilbo reported on June 22 that if the U.S. really revokes the exemptions allowing Samsung Electronics and SK Hynix, two major semiconductor manufacturers, to use American semiconductor equipment in their Chinese factories, it will impact their manufacturing centers in China.

The report noted that Samsung Electronics has memory chip factories in Xi'an and Suzhou, China, producing NAND flash chips accounting for approximately 40% of its global capacity. SK Hynix also operates DRAM and NAND chip production bases in Wuxi, Chongqing, and Dalian, producing around 40% of China's DRAM and 20% of its NAND chips.

The Chosun Ilbo analyzed that if the U.S. further tightens restrictions on semiconductor exports to China, South Korean companies' factories in China may face long-term operational difficulties, even if they do not immediately shut down.

Previously, due to the U.S. tightening restrictions on semiconductor exports to China, South Korea's semiconductor exports to China have significantly declined. Bloomberg reported in March that South Korea's chip sales to China fell by 31.8% year-on-year in February, a larger drop than the 22.5% contraction reported in January. This performance decline coincided with the timing of the U.S. imposing stricter semiconductor export controls on China. By the end of 2024, China received about two-fifths of South Korea's technological exports, but as various factors slowed down South Korean trade, the flow of chips between the two countries appears to be slowing down.

Chip exports from South Korea to China declined in the first two months of 2025. Chart by Bloomberg

In October 2022, the U.S. banned companies from the Netherlands, South Korea, and other regions from selling advanced process chips and their manufacturing equipment to mainland China. This had a severe impact on South Korean companies with factories in China. Under pressure from these companies, Samsung Electronics and SK Hynix were granted a one-year export control exemption. In 2023, former U.S. President Biden granted both South Korean companies "Verified End User" (VEU) status, allowing them to obtain some American semiconductor manufacturing equipment without case-by-case approval.

A spokesperson for the U.S. Department of Commerce responded to reports of the Trump administration's intention to revoke this exemption by stating that chip manufacturers can still operate in China, and the new enforcement mechanism reflects the licensing requirements applicable to other companies exporting semiconductors to China, ensuring that the U.S. has equal and reciprocal procedures.

White House officials revealed that the U.S. currently has no plans to implement this measure, calling it "a tool in our toolbox" to prepare for possible stalemates. Reuters pointed out that the official mentioned that the U.S. is concerned that China may not yield on rare earth exports.

If the Trump administration actually cancels the exemption, industry insiders said this would only make it more difficult for American semiconductor equipment companies to ship products to foreign multinational corporations, helping American competitors in China. One person commented: "This is a gift."

Opponents within the Trump administration also worry that canceling the exemption will ultimately help Chinese companies gain control over these factories. It is expected that affected foreign chip manufacturers may seek case-by-case licenses from the U.S. government to supply their Chinese factories and look to replace American equipment with Japanese and European equipment, ultimately harming the interests of American companies themselves.

This article is an exclusive contribution by the Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7518978929902895642/

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