"U.S. Semiconductor Curbs Force Global Supply Chain Reckoning"

The U.S. government has tightened export controls on semiconductor manufacturing, effectively revoking the authorizations held by South Korean firms Samsung and SK Hynix to receive U.S. semiconductor equipment for operations in China. The move, outlined in the Federal Register, removes these companies from a "Validated End User" (VEU) status that previously allowed U.S. suppliers to ship goods to them without requiring individual export licenses, making the process more efficient and reliable. This change aligns with broader U.S. efforts to limit China’s access to advanced semiconductor technologies since 2018, particularly in the context of national security and technological competition. The Commerce Department will allow these companies to operate existing facilities in China but will not grant licenses for capacity expansion or technology upgrades [1].

The revocation of these authorizations is part of a strategic shift in U.S. export control policy that has evolved over multiple administrations. The Trump and Biden administrations have expanded restrictions on advanced semiconductors, design tools, and manufacturing equipment through a combination of entity lists, technology-based controls, and country-specific rules. In 2022, the Biden administration added advanced logic chips, GPUs, and manufacturing equipment to the Commerce Control List, while the Trump administration, as of 2025, has continued to reinforce these measures by adding more Chinese entities to the Entity List and restricting key products like the Nvidia H20 GPU [2].

The impact of these changes is expected to ripple through the semiconductor supply chain. U.S. equipment manufacturers such as Lam Research , Applied Materials , and KLA Corp will likely see reduced sales to China, as the new rules require licensing for all future equipment shipments to Samsung and SK Hynix. Shares of these firms fell in response to the news, signaling investor concerns over reduced access to China’s manufacturing market. The shift also potentially benefits U.S. firms like Micron , which competes directly with South Korean memory chip producers [1].

The U.S. government has also coordinated with Japan and the Netherlands to align export control policies, reinforcing a global consensus on limiting China’s access to advanced semiconductor manufacturing. These controls are further supported by the Foreign Direct Product Rule (FDPR), which extends restrictions to goods produced using U.S. technology or software, even if they are manufactured outside the U.S. The FDPR has been expanded to include not only equipment but also chips and packaging techniques, ensuring that even indirect access to advanced U.S. technology is tightly controlled [2].

Despite these efforts, gaps and workarounds persist. Some Chinese firms have restructured to avoid being placed on the Entity List, while others have sought to acquire foreign-owned manufacturing facilities in China that are not majority-owned by Chinese entities. U.S. semiconductor firms have also adapted by modifying their chips to meet control thresholds, as seen in the case of Nvidia’s H20 GPU, which was adjusted to avoid falling under U.S. restrictions. These responses highlight the challenges in fully controlling the flow of advanced semiconductor technology to China [2].

The U.S. government is also facing scrutiny over how it handles export licensing and its interactions with China. Congress has introduced several bills aimed at increasing transparency in licensing decisions and strengthening control mechanisms. Meanwhile, the administration faces criticism for approving the sale of modified chips like the H20 in exchange for government revenue, which some argue undermines national security priorities [2].