US Gov't Deals Major Blow To Samsung And SK Hynix Chip Production In China
Until today, both Samsung and SK Hynix enjoyed a "Validated End User" (VEU) waiver when it came to exporting chip-making and related technologies from the U.S. to China. That means they could ship said equipment into China with few restrictions, and importantly, didn't have to apply for approval every time they did so.
The waiver was issued in 2023 during the Biden administration, but as of today, the companies now have 4 months (120 days) until it expires. Both chipmakers can reportedly get licenses to continue their operation, though we'd suggest that the new conditions will be far more restrictive. Korean government researcher Kim Yang-paeng notes the limitations imposed will cap Chinese memory fab production at "legacy" level, something that was likely the U.S. government's base intention. Indeed, the U.S. Secretary of Commerce says that it's "[...] closing export control loopholes -- particularly those that put US companies at a competitive disadvantage."
Samsung's cool California HQ
This decision comes a few days after Trump had a tête-a-tête with South Korean president Lee Jae Myung, settling for a 15% tariff on Korea, down from an initially threatened 25%. Reports suggest these two companies can keep their Chinese fabs going just fine, but expansions or upgrades will be difficult. For its part, Bernstein research says the move ought to have relatively small impact globally, given that reportedly, non-Chinese companies only spent about $2b in new equipment for China in 2024.
It's reasonable to say that both DIMMs and SSDs are dirt cheap now, so an increase in difficulty producing older chips probably won't have a significant market effect, plus there's pricing headroom to absorb that. Although Samsung and SK Hynix are major players in these businesses, competitors like Micron will have no qualms about mopping up any market share left on the table by SK Hynix and Samsung.
