US Revokes VEU Authorization for Intel, Samsung, and SK Hynix in China

2025-09-01

On August 29, 2025, the US Department of Commerce's Bureau of Industry and Security (BIS) revised the Export Administration Regulations (EAR), removing Intel Semiconductor (Dalian) Co., Ltd., Samsung (China) Semiconductor Co., Ltd., and SK Hynix Semiconductor (China) Co., Ltd. from the list of Validated End Users (VEU) authorized for the People's Republic of China. This policy change will take effect 120 days after the announcement, specifically on December 27, 2025. Afterward, these companies will have to apply for licenses on a case-by-case basis to continue importing US semiconductor manufacturing equipment.

Background and Purpose of the US Policy Adjustment

US Revokes VEU Authorization for Intel, Samsung, and SK Hynix in China

Since the US imposed export restrictions on advanced process equipment to China in October 2022, Samsung and SK Hynix have been lobbying the US government and successively obtained temporary exemptions and "indefinite authorizations." However, the US Department of Commerce believes that the previous exemptions left institutional loopholes, contrary to the original intent of a "small yard, high fence" policy.

The US revocation of the VEU authorization aims to further restrict China's access to advanced semiconductor technology and equipment, consolidating its leading position in the global semiconductor industry. The US Department of Commerce has clearly stated that it will approve licenses for equipment necessary to maintain the normal operation of existing factories but will strictly prohibit licenses that support expanding production capacity or upgrading advanced technology, thereby strictly limiting the inclination of cutting-edge semiconductor capacity towards the Chinese market.

Direct Impact on Relevant Companies

Samsung's Xi'an factory is one of the world's largest NAND flash production bases, producing 42% of Samsung's global NAND flash. SK Hynix's Wuxi factory accounts for nearly half of the company's DRAM chip production capacity. This policy adjustment directly restricts the expansion plans and technology upgrade processes of Samsung and SK Hynix's wafer fabs in China, potentially weakening the long-term competitiveness of their existing production lines in China.

In addition, US-based semiconductor equipment manufacturers will also face pressure. The in-China sales business of companies such as KLA, Lam Research, and Applied Materials may suffer negative impacts due to the restricted equipment purchases by Samsung and SK Hynix.

It is worth noting that TSMC's wafer fabs in China have not been affected by this policy adjustment, and the "permanent exemption" for the use of US technology that it previously obtained remains valid. This special treatment is believed to be possibly related to its previous announcement of an additional $100 billion investment in the US, highlighting the US's inclination towards "domestic investment orientation" in its semiconductor industry policy.

Subsequent Impact of Revoking VEU Authorization

In the short term, the risk of tightness in the global memory chip supply chain has sharply increased. Data shows that if the production capacity of these in-China factories drops by 10%, it may cause global smartphone and computer prices to rise by 3% to 5%.

In the medium to long term, South Korean companies may accelerate the transfer of production capacity to places like Vietnam and Malaysia. Meanwhile, domestic Chinese companies such as YMTC, CXMT, as well as domestic equipment manufacturers like AMEC and NAURA, may welcome a window of opportunity for alternative development. In addition, US equipment manufacturers such as KLA and Applied Materials will also face performance pressure due to the loss of important customers.

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